This Tuesday, I’ll be before the Appeals Court on a case concerning a real estate contract. I won a trial several years ago involving a contract dispute, and the other side has appealed. This is an interesting case that concerns some important topics on real estate contracts.
In an appeal, a party is asking a reviewing court (known as an appellate court) to determine if the trial court made any errors in law. It is generally not enough to simply argue that the lower court made the wrong decision in the case. Rather, a successful appeal requires a showing that the lower court misapplied the law.
No new evidence is introduced in an appeal. The record is limited to the testimony and exhibits from trial. Each side is permitted to file a written argument to the court, known as a brief, and argue their side of the case to the court, known as an oral argument.
Lessons for Real Estate Contracts
This appeal concerns a couple of important topics relevant for real estate contracts.
Oral Agreements To Sell Property
Most people are familiar with the requirement that a sale of property needs to be in writing to be enforceable, known as the statute of frauds. It is a common misconception, however, that oral agreements for the sale of property can never be enforced. In certain circumstances, the law will not allow a party to avoid enforcement of an oral contract for real estate.
In this appeal, the contract was oral. However, the parties to this agreement changed their circumstances in reliance of this oral agreement, and partially performed it: a recognized exception to the statute of fraud.
This is a critical lesson for anyone involved in a real estate contract: do not assume that, because an agreement may be oral, there are no repercussions for failing to perform. As with any legal agreement, one should speak with an experienced attorney and proceed with caution.
Getting Out of a Contract
This appeal also concerns another important part of contract law: when can someone “undo” a contract? The “undoing” of a contract, known as a rescission, generally requires there to be a complete abrogation of the agreement. In other words, if a party really fails to do what they are supposed to, the other party may have the option of asking the court to cancel the contract. My appeal is primarily about this issue: whether or not one of the parties did their required obligations under the contract.
It is important to understand that the right to rescind an agreement is a high burden to meet. Courts will not allow rescission when a party has merely breached such an agreement, generally, it must be shown that an “utter failure of consideration” occurred.
This is important for anyone entering into a real estate contract agreement to know. Getting out of such an agreement is no guarantee, and the law provides powerful remedies for enforcing these agreements.
If you need assistance with a real estate contract matter, contact me for a consultation.