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32. For whom will the court find?
Two days after that sale, the original buyer told the seller that she had changed her mind and wanted to complete their contract. When the seller told her that he had sold the land to a third party, she sued him for breach of the written contract.
A buyer and a seller entered into a written contract for the sale of land. The contract satisfied the requirements of the statute of frauds. Because the buyer needed time to obtain financing, the buyer and the seller did not agree upon a closing date, and the written contract did not contain a stated closing date. Ten days after signing the contract, the buyer and the seller orally agreed to rescind the contract. The next day, the seller sold the land to a third party.
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The requirement that a contract in writing may be altered or modified only by a subsequent writing does NOT apply to a subsequent agreement to rescind or abandon the contract to the same degree. An abandonment or rescission is a termination of the contract, not a modification. If the subject matter of the contract falls within the Statute of Frauds then the recission should generally be in writing BUT an oral recission may still be enforceable if it is executed or promissory estoppel is present.
A «time is of the essence» clause in real estate contracts requires one party to fulfill his or her obligations within a certain time frame. If the party fails to complete the required task on time, it is regarded as a breach of contract. Merely inserting a closing date in a real estate sales contract does not ensure that the date will be «of the essence.» In the absence of the explicit clause, both parties are entitled to a «reasonable» postponement of the closing.
D is correct. The buyer and seller properly executed a contract for the sale of land, followed by an agreed-upon oral rescission of that written contract. Although their original contract was required to be reduced to writing under the Statute of Frauds, their subsequent rescission was not. Had the parties attempted to modify or alter the written contract, a writing would have been necessary. But a majority of courts allow a contract rescission to be oral if promissory estoppel is present. The buyer's conduct of orally agreeing to rescind the contract foreseeably induced the seller to change his position in reliance on that oral agreement. Therefore, the seller was free to sell the land to the third party and the buyer's suit against the seller for breach will lose because the rescission was valid.
A is incorrect. This answer choice implicates the rule that in the absence of a «time is of the essence» clause, parties are entitled to a reasonable postponement of the closing date. However, this rule is irrelevant here, where the oral rescission effectively extinguished the contract. Any subsequent attempt to invoke a closing date postponement would be superfluous.
B is incorrect. As previously explained, the Statute of Frauds does require land sale contracts to be in writing. And even though a subsequent modification or alteration of that contract would typically need to be in writing, this does not apply to all rescissions, which may sometimes be oral.
C is incorrect. This answer reaches the correct answer with the wrong reasoning. The seller will prevail, but not because the original land sale contract did not contain a closing date. The Statute of Frauds does generally require essential terms in the writing to be enforceable, but a closing date is not considered one of those terms. Nevertheless, the seller will prevail, as explained above.