51 Cal. 2d 119 (1958)

A seminal California Supreme Court opinion in the area of contracts law.

The Plaintiff, a real estate developer, was planning to construct a shopping center on a tract adjacent to the Defendant’s land. They spent several months negotiating through a real estate agent for the sale of the Defendant’s property. The Defendant rejected several of the Plaintiff’s offers and then put forth one of her own. The Plaintiff immediately accepted it.

The deposit receipt represented the written agreement. Under its terms the Plaintiff was required to deposit $1,000 with the real estate agent and was given 120 days to find satisfactory leases for the property before paying the balance. The Plaintiff turned over the $1,000 and was in the process of securing leases when the Defendant contacted him to let him know she would not sell her land under the terms contained in the deposit receipt. The Plaintiff told the Defendant that satisfactory leases had been obtained and offered to pay the balance of the purchase price. The Defendant failed to tender the deed as provided in the deposit receipt.

The Plaintiff brought action for damages for breach of contract. After a trial without a jury, the court concluded that the agreement was “illusory” and lacking in “mutuality.” From the judgment entered in favor of the Defendant, the Plaintiff appealed. The California Supreme Court reversed.  The Court held the Defendnat’s promise of good faith saitsfaction provide sufficient consideration to make the promise not illusory.

 

 

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