A seller, the owner of a parcel of land, has entered into an oral agreement to sell the land to a purchaser for $20,000. The purchaser has delivered the purchase price to the seller, who deposited it in her bank account. The seller then changes her mind about selling the property, sends back the purchase price plus interest, and refuses to give the purchaser a deed. The purchaser sues for specific performance.
In that suit,
A. The purchaser will win because he performed his obligation.
B. The purchaser will win because a court of equity will specifically enforce an oral contract when there has been part performance.
C. The seller will win because she sent the purchase price back and therefore has clean hands.
D. The seller will win because of the Statute of Frauds.
{ 12 comments… read them below or add one }
Answer D is correct. Usually, in an action for specific performance, an agreement to convey land must satisfy the Statute of Frauds. The Statute is satisfied if the contract to convey is evidenced by a writing or writings containing the essential terms of a purchase and sale agreement and signed by the party against whom the contract is to be enforced. If there is no written agreement, a court of equity can specifically enforce an oral agreement to convey only if the part performance doctrine is satisfied. In a majority of jurisdictions, part performance is proven when the purchaser pays the purchase price, has possession of the land, and makes improvements on the land, all with the permission of the seller. No jurisdiction is satisfied by payment of the purchase price alone. Since there is no written purchase and sale agreement in this case, the purchaser can prevail only if he can show conduct sufficient to satisfy the part performance doctrine. However, payment of the purchase price alone is never sufficient to satisfy the doctrine.
Answer A is incorrect. The fact that the purchaser has performed all of his obligations under the contract will not suffice. Usually, in an action for specific performance, an agreement to convey land must satisfy the Statute of Frauds. The Statute is satisfied if the contract to convey is evidenced by a writing or writings containing the essential terms of a purchase and sale agreement and signed by the party against whom the contract is to be enforced. If there is no written agreement, as here, a court of equity can specifically enforce an oral agreement to convey only if the part performance doctrine is satisfied. In a majority of jurisdictions, part performance is proven when the purchaser pays the purchase price, has possession of the land, and makes improvements on the land, all with the permission of the seller. No jurisdiction accepts payment of the purchase price alone as proof of part performance. Since all the purchaser did is pay the purchase price, he is not entitled to specific performance. Therefore, B is incorrect.
Answer C is incorrect. Return of the purchase price will not preclude enforcement of a purchase and sale agreement if the agreement is otherwise enforceable either under the Statute of Frauds or the part performance doctrine. In this case, the oral agreement is not enforceable. Also, “clean hands” are required of the plaintiff in an equity action. The cleanliness of the defendant’s hands is irrelevant.
Answer D
D. the seller will win b/c land is unique and it must be in writing, SF. Court of equity for SP will not look at an oral K b/c there is not valid and definite terms (other element inadequate legal remedies, mutuality, feasibility and defenses).
D –statute of frauds; the contract is basically voidable soon after conception!!!!
D –statute of frauds
Exceptions to the Statute of Frauds
An agreement may be enforced even if it does not comply with the statute of frauds in the following situations:
Merchant Confirmation Rule, under the UCC. If one merchant sends a writing sufficient to satisfy the statute of frauds to another merchant, the merchant has reason to know of the contents of the sent confirmation and the receiver does not object to the confirmation within 10 days, the confirmation is good to satisfy the statute as to both parties.
Admission of the existence of a contract by the defendant under oath,
Part Performance of the contract. The agreement is enforceable up to the amount already paid, delivered, etc.
The goods were specially manufactured for the buyer and the seller either 1) began manufacturing them, or 2) entered into a third party contract for their manufacture, and the manufacturer cannot without undue burden sell the goods to another person in the seller’s ordinary course of business– for example, t-shirts with a baseball team logo or wall-to-wall carpeting for an odd-sized room.
Promissory Estoppel can be applied when the charging party detrimentally relies on the otherwise unenforceable contract.
D is correct–insufficient part performance (as to part performance doctrine). The payment of $20,000 alone will not take the oral contract out of the Statute of Frauds.
D is the best answer. In order to take a land sale contract out of the statute of frauds, there must be payment with either possession or improvements made to the property.
D is correct. Part performance would have been correct if the payment was coupled with possession of the property or improvements made on the property. The check cannot replace a writing because writing requires the land description, price etc. Therefore A is incorrect and D is correct.
In real estate sales, if a buyer takes possession by occupying the property, most courts will enforce the contract. In addition, the Statute of Frauds will be suspended if the buyer has made permanent improvements to the property or rendered partial or full payment. In any of these situations a court may uphold the contract despite a violation of the statute of frauds because the parties’ subsequent actions are evidence that a contract existed.
Therefore, Answer A is correct because the purchaser has fully performed, and the bank record can be used as evidence that the contract existed and was fully executed.
D and not B b/c to satisfy the SOF in a land contract, one needs part performance AND two of the following: payment, possession, or improvements
A – Part performance will take the executed portion of the K out of SF. Here, the entire K was executed therefore B is incorrect.