Monday, June 1, 2009

Seller of real property allowed void agreement even though payments had been made;buyer cannot rely on equitable conversion or equitable redemption

BRYAN GIBSON v. DAWNE JONES (Tenn. Ct. App. February 25, 2009).

This appeal involves a claim for specific performance of a land sale contract. Plaintiff made partial payments towards the purchase price for several months after the agreement was reached. In 2005, however, the relationship between the Plaintiff and Defendant deteriorated, and the Plaintiff stopped making payments. Defendant then informed the Plaintiff that the agreement was cancelled and began looking for another buyer. After the presentation of Plaintiff’s proof, the trial court found that Plaintiff was unable to perform under the agreement within a reasonable time. The trial court also found that the agreement expressly permitted the Defendant to cancel the agreement in the event of Plaintiff’s non-performance. Finding no error, we affirm.

Opinion may be found at the TBA website:

“In contracts for the sale of land, “[t]ime is generally not of the essence ‘in the absence of an express stipulation, a manifestation of intention from the contract or subject matter involved, or an implication from the nature of the contract or circumstances of the case.” In the present case, however, Ms. Jones frequently demanded that Mr. Gibson make full payment immediately. Accordingly, the trial court grafted onto the agreement a requirement that performance (i.e., payment) be made within a reasonable time. Tennessee courts have approved this method:
Where no provision is made in the contract for performance, a reasonable time is implied. Completion of a contract within a reasonable time is sufficient if no time is stipulated. Where the parties have not clearly expressed the duration of the contract, or where the duration of the contract is indefinite, the courts will imply that they intended performance to continue for a reasonable time.” Id.

“Following this rule, the trial court found that Ms. Jones had the authority to demand that Mr. Gibson make full payment in January 2006. Furthermore, the July 2003 document allowed either party to rescind the agreement “for any reason either party does not fulfill the selling and/or purchasing of the land.” We agree with the trial court’s conclusion. Mr. Gibson had not closed on the land or obtained financing to make full payment. Accordingly, Ms. Jones had the authority to void the agreement and look for other potential buyers.” Id.