Legal Question in Business Law in California

Re: Breach of contract questions.

The question here may be whether the check fulfills the conditions of the agreement. If the agreement was for you to get a deposit that you can immediately hold, then buyer1 didn't do that. So you can argue that buyer1 failed to get the right to stop you from selling to buyer2. We'd need to review the contract and talk with you to confirm that you would win in court, but then we could inform buyer1 that you would win with an opinion letter and hopefully avoid you even being sued. Feel free to contact me or our CA attorney on this.

Re: Breach of contract questions.

Buyer #1 has a strong case, although not air-tight; and giving a post-dated check is not fraud, merely evidence of an intent that it should not be negotiated until the date thereon. Further, people signing documents such as contracts and accepting instruments such as checks are presumed to have read them and know their contents, such as terms, dollar amounts, names and dates.

I think Seller was foolish to deal with Buyer #2. The postdated check is not a very good defense if it is a defense at all; it would have been prudent to contact Buyer #1 first to see if check issue could be cleared up or at least to place Buyer #1 on notice that the deal was being rescinded. Then Seller should have returned Buyer #1's check.

On the other hand, there is a case called Wilson v. Lewis, decided in 1980 by the Court of Appeal and reported at 106 Cal.App.3d 802, in which a postdated $500 deposit check was deemed insufficient to bind a seller in a real-estate transaction; however, the facts in Wilson are very different, because the check was accepted by a broker representing both parties, and the seller never saw the check and didn't have reason to know it was postdated. Further, the check had additional conditions written on it such as a termite inspection. I doubt that this case has any bearing on your situation.