John J. McCARTHY, Jr. v. Ann G. TOBIN; Robert Diminico &
another, interveners.
Facts
The plaintiff had entered into an
agreement with the first defendant in which the former was to purchase a
certain property to the latter. The two signed an Offer to Purchase (OTP)
agreement. The OTP described both the property and the price to be paid. It
also included a term that the parties were to execute a standard form Sale and
Purchase Agreement acceptable to both of them and that this form will be the
agreement between the parties. In addition, the OTP stipulated that time was of
the essence specifying the time in which the standard form was to be executed. The
OTP also provided that it was binding on the parties. Both parties continued to
negotiate well after the stated deadline and the defendant never objected. Upon
the execution of the sale and purchase agreement sent by the defendant, the
plaintiff was notified by the defendant’s lawyer that they had accepted the
offer to purchase the same property from the intervener telling the plaintiff
that they were late in the execution of the agreement. The offer from the
intervener was received on the same day the plaintiff executed the document.
Procedural History
This case arose from a motion for
summary judgment in which the plaintiff had sought to have the defendant
perform his obligations under the agreement between them. The defendant had
also sought a summary judgment against having to perform under the agreement
with the plaintiff. Likewise, the intervener was also seeking a partial motion
to their favor. The motion judge entered summary judgments in favor of the
defendant and the interveners. The
plaintiff applied for a review of that decision to the Massachusetts Appeals
Court which vacated the judgment in favor of the defendant and the intervener
while at the same time remanding it for entry of judgment in favor of the
plaintiff. The present case is an application by the interveners for a further
review of the Massachusetts Appeals Court’s opinion that the plaintiff is
entitled to specific performance.
Issues
1. Whether
the offer to purchase (OTP) executed by the plaintiff and the defendant
constituted a binding contract.
2. Whether
the defendant waived the requirement that time would have been of essence by
continuing to negotiate even when the stated deadline had passed?
3. Whether
specific performance would be the appropriate remedy for the plaintiff in the
case?
Rules
Where parties have manifested
their clear intention to be bound, provisions that stipulate the performance of
further formalities may not act to defeat that intention. The only exception
would be where those subsequent formalities contain essential terms of the
contract. Moreover, revisions of nonessential terms of an agreement do not
change its binding nature.
Secondly, a party who fails to
object to a condition that time is of essence and proceeds with their
undertakings is deemed to have waived their right to rely on a breach of that
condition.
Lastly, specific performance is the appropriate
remedy in land cases given that money damages are often inadequate. Specific
performance will, however, be granted only in those cases where it would not
affect rights that accrued prior to the ones for which it is sought.
Analysis
The OTP indicated that the
plaintiff and the defendant had manifested their clear intention to be bound. Besides,
the requirement to execute a sale and purchase agreement did not relate to
essential terms of the contract which were already concluded in the OTP. Even
though not controlling, the decision by the defendant to proceed with the
transaction even when the stipulated deadline had passed without any objections
meant that they had waived their right to rely on that date. Lastly, money
damages would not have been an appropriate remedy in a land transaction such as
the one in this case given that there were no rights established prior to the
contract between the plaintiff and the defendant and which would have been
adversely affected were specific performance to be granted.
Conclusion
For one,
there was a binding contract between the parties. The defendant had waived any
rights to rely on time deadlines and specific performance was the appropriate
remedy.
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