Tuesday, January 27, 2009

California Supreme Court Reverses Patel Decision

Contract Was Enforceable Because Settled Law Provided a Time for Payment

Patel v. Liebermensch
(December 22, 2008, S156797)
9 p. decision

The California Supreme Court unanimously reversed the Court of Appeal decision in Patel v. Liebermensch, agreeing with the trial court that the parties had entered into an enforceable contract. The absence of terms specifying the time and manner of payment did not make a real estate contract too uncertain to enforce.

The Court pointed out that the manner of payment was not actually in dispute, that the only missing term was the time of payment. It is settled law that if a contract for the sale of real property specifies no time of payment, a reasonable time is allowed.

The Court of Appeal had improperly relied on the parties' conduct after the dispute arose to conclude that an agreement had not been reached when the contract was signed. When the contract was executed it contained easily ascertainable essential terms. Neither party could render it unenforceable by seeking to change those terms.

Note: This was an action for specific performance of a real estate option contract for a condominium unit in San Diego. When Patel exercised the option in July, 2004 one of his reasons was because he wanted to take advantage of the mortgage interest rates available at that time. It would be interesting to know how the parties feel about this transaction now given the dramatic changes in real estate values and mortgage availability since the time that this suit was filed.

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