Legal Question in Business Law in Maryland

written contract

Joe and Betty entered a written contract for the purchase and sale of a vacant parcel of

rural property. As seller, Joe set the price at $50,000 and Betty agreed.

Before Betty paid the purchase price, she had the property appraised. To her dismay,

she learned that the fair market value of the land was only $15,000. When Betty realized that she had made a bad deal, she refused to pay. Joe threatened to sue for breach of contract. But Betty argued that no contract existed for lack of consideration, an essential element in contract formation. What result if Betty takes the position that consideration is lacking because:

(a) Neither party has performed as promised. She did not pay, and Joe did not

sign and deliver the deed to the property; or

(b) The true value of the land makes it an �insufficient� exchange for $50,000.


Asked on 4/08/09, 3:11 pm

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: written contract

If there is a written contract stating that Betty will pay Joe $50k for the parcel, and there are no contingencies for cancellation by Betty, such as it being appraised for a certain amount, then Betty is in breach of contract if she fails to go through with a settlement on the property. Betty's "bad bargain" is not a justification for her refusal to settle. Betty's refusal to settle prevents Joe from completing his end of the deal, which is to convey clear marketable title. So Joe can invoke any default remedies set out in the contract, but most likely will have a suit for damages against Betty if he later sells the property for less than $50k, which would establish his damages at the difference between $50k and the re-sale price.

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Answered on 4/08/09, 3:51 pm


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