Question

On April 1, 2016, Mary and Tom orally agreed that Mary would purchase Tom's house and 1 acre of land for $350,000 cash on April 15, 2017. In the meantime, Mary and Tom agreed that Tom would continue to own and live on the property.   On April 15, 2017, Mary presented Tom with a cashier's check for $350,000 for the house and Tom transferred the deed to the house and land to Mary in her name. Mary and Tom properly filed all the documents necessary for the closing on the real estate sale.

Mary and Tom had also agreed previously that Tom could remain on the property following the closing of the sale on April 15, 2017 until April 17, 2017 to give him time to move out. On April 17, Tom refused to move out claiming that their oral agreement for sale of the property was invalid and unenforceable under the Statue of Frauds.

1. Define what a contract is and analyze all of the elements of a contract to determine if they are all present? Is this a contract governed by the UCC or by the common law? Why did you answer the way that you did? Could Tom have terminated the contract if he wanted to on January 7, 2017? If so why, if not why not? Was the sale originally subject to the Statute of Frauds and if so, for what reason(s) and why?

2. Is the contract for sale of the property valid so that Tom has to relinquish possession of the property? Why or why not?

Answer 1

1) The Uniform Commercial Code, also termed as UCC, refers to a uniform act which includes sales as well as commercial law. The UCC covers the statute of frauds, a state law which often requires specific written contracts and signed by the parties to make it enforceable when the contracts for the sale of goods is $500 or more than it. In the given scenario, there was a verbal agreement between Tom and Mary. Although no written contract was created for the property's sale, Tom however agreed when required paperwork was signed and filed. Thus Tom cannot claim that the sale of the property was unenforceable and invalid under the Statue of Frauds

2) To form a legally binding contract, there are mainly six elements of formation of contract which need to be satisfied. These elements include valid offer; acceptance; consideration; lawful motive; the contract terms must be reasonably clear and certain; and the subject matter is a legal purpose. When all elements of formation for common-law contract do not exist, it can be void or voidable. In the given case, mirror image acceptance was provided, as now there were revocation r counteroffers of the original offer and agreement; thus indicating that all elements of the common-law existed, and consequently Tom must relinquish property's possession.