Question

Law Question

Let's assume that company A is buying land from company B, but company A will make the payment until the end of the month. Then Company A and B make a promise that Company A will pay and the purchase will be finalized. However, Company C appears and makes a better offer to the Company B. Company B is attracted by the offer and begins to negotiate with Company C. How Company A could sue Company B for not fulfilling its promise and what would be the charges for the demand

I need an explanation as extended as possible, please

Answer 1

First of all, we need to consider Statute of Frauds. As per the Statute of Frauds, every dealing in land related property must be in writing. Thus we can assume that company A and company B has their promises converted into contract and it is in writing. In case, it is not, then company A does not really have a lot of ground to sue company B. However, for the sake of argument, let’s assume that company A and B has the promise to sell the land and pay the money in writing.

In this case (when A and B has contract in writing), company A does not need to sue company B for negotiating with company C. This is because till the negotiation phase, company B has not broken their promise or the contract. However, if company B sells the land to C and eventually is unable to keep up their end of the deal, then company A can sue company B. In such instance company A will be entitled to a damage or restitution or rescission.

Now, the type of damages that company B will be liable to pay company A can vary. Depending on the situation and the purpose of the land for company A, the court may choose to award monetary compensation to company A (called damages). However, based on the situation court may also nullify the sale between company B and company C (called rescission). The court may also ask company B to eventually sell the land to company A as per the agreement (injunction). These are all remedies but the detail of the situation is required. For example, if the land is unique for A and no other land can replace it, then court may order rescission or injunction for favor of A.