Contract Law – Sale of Land – Formation
Real Property – Sale of Land – Oral Contract
The plaintiff brought an action against the defendant for specific performance and damages. The plaintiff claimed that the defendant agreed to sell him three quarters of land. The defendant’s position was that there was no agreement and if there was, it was not in writing as required by The Statute of Frauds. The plaintiff made this application for a resolution of the initial question of liability as to whether an agreement was created and if it was, then proof of damages would follow. The plaintiff argued that a contract was created and that it complied with the statute because he made his offer in writing, via an internet-based land auction program, and the acceptance was orally communicated by a telephone conversation. Therefore, all the requisite elements of a valid land sale were present. The defendant had used a website to list 17 quarters of land for sale, including six quarters of relevance to the action. The website was intended to connect sellers of farmland with interested buyers in a type of “non-binding auction” to permit sellers to gauge interest in their land, find the best possible price and avoid realtor’s commissions if a sale were completed. The listing showed three groups of the farmland for sale, described as 1) three adjoining quarters (the subject quarters); 2) two quarters (the adjacent quarters) and 3) one quarter (unsold quarter). In his online comments to the defendant during the auction, the plaintiff said that he wanted all five quarters (the subject and adjacent quarters). The plaintiff bid on each of the above parcels and had the highest bid on the subject quarters, but that in itself did not guarantee the purchase under the terms of the online auction program. He stopped bidding on the adjacent quarters because he thought they were becoming overpriced. After the auction, the plaintiff consulted with family members regarding whether to pursue negotiations with any of the bidders. They discussed the problems that would occur if the subject quarters were separated from the adjacent quarters because the two blocks were owned by different individuals. The defendant then telephoned the plaintiff and gave him two package options for the sale, both of which resolved the identified problem by including the purchase of the adjacent quarters. The package options were to purchase the subject and the adjacent quarters for $1,050,000 (which was 5 percent more than the $625,000 the plaintiff offered for the subject quarters and his last bid of $375,000 on the adjacent quarters) or the subject quarters and one of the adjacent quarters for $840,000. At the end of the conversation, the plaintiff testified that he wanted to be sure that regardless of his response to the package option offers, he would be able to buy the subject quarters for $625,000. The plaintiff did not have concerns about the purchase because he said that the defendant told him that “we had them”. He believed that this indicated the defendant’s willingness to accept his bid on the subject quarters and that if he accepted either of the two options, then either of the newly accepted offers would replace the agreement respecting the subject quarters. The defendant’s interpretation of the conversation was that he declined to accept the offer on the subject quarters until he heard back from the plaintiff respecting the package options and then he would decide whether or not he would sell the subject quarters. He either misheard or misunderstood the plaintiff’s question about the subject quarters and denied that he gave any assurance that he would sell them to him regardless of his response to the package offers. The plaintiff called the defendant shortly after the first conversation and advised that he would not accept either of the package option offers but would immediately bring the deposit for the purchase of the subject quarters. The defendant told him to “hold off”. The plaintiff interpreted that to mean that there was no urgency regarding the deposit rather than that no agreement existed respecting the subject quarters. The defendant testified that he said he was not prepared to accept the deposit at this time, which meant that he was not prepared to accept the plaintiff’s bid on the subject quarters. Three days later, the defendant emailed the plaintiff and said that he would not be accepting the bid. The issues were: 1) whether a contract was formed; 2) if so, did the Statute of Frauds apply.
HELD: The plaintiff’s action was dismissed. He had not established on a balance of probabilities that he and the defendant were parties to a valid and enforceable agreement of sale regarding the subject quarters. The court found with respect to each issue that: 1) there was no contract. In interpreting the words of the first telephone conversation and the context of the bidding process, using the standard of the reasonable bystander, there was no consensus ad idem between the parties. The second telephone conversation had done nothing to alter that finding. Both the plaintiff and the defendant reasonably believed different things; and 2) the Statute did not apply as there was no contract.