First Development Corporation of Kentucky (FDCK) sought to purchase a fifteen-acre parcel of riverfront property owned by Martin Marietta. On May 9, FDCK made an offer to purchase the property for $300,000, which it submitted to Coldwell Banker, Martin Marietta’s real estate agent. This offer was accompanied by an earnest money deposit evidenced by a $1,000 check payable to Coldwell Banker. The deposit was fully refundable if transfer of title to FDCK was not completed for any reason except FDCK’s failure to perform. After this offer expired without being accepted, FDCK asked Don Gilmour, Coldwell Banker’s account agent, to seek a counteroffer. In a letter to Gilmour dated September 7, Martin Marietta agreed to sell the property for $550,000. The counteroffer stated it was to remain open for thirty days. Gilmour informed Pollitt, president of FDCK, of the counteroffer by telephone on September 7 and sent a copy of the letter to Pollitt, which was received on September 12. Within days of the expiration of FDCK’s original offer, Bill Harvey, president of Harmony Landing, a development company, initiated direct negotiations with Martin Marietta to purchase the riverfront parcel. These negotiations resulted in a contract being executed on September 21 or 22. During a September 21 phone call, Gilmour advised Pollitt of Harmony Landing’s interest in buying the property, but Pollitt remained noncommittal during the conversation. Later that day, Pollitt, along with his partner and engineer, visited the property and discussed various studies and arrived at a decision to accept the September 7 offer from Martin Marietta. However, Pollitt did not convey this acceptance to Gilmour. Rather, he consulted his attorneys regarding a contract to accept Martin Marietta’s offer. After consulting with his attorneys, Pollitt prepared an acceptance of Martin Marietta’s offer but did not put it in the mail. The next morning, Pollitt placed the acceptance in his office suite’s mail depository. However, after being informed by Gilmour that Martin Marietta had accepted Harmony Landing’s option on the river property, Pollitt retrieved the acceptance and personally delivered it to Gilmour at 4:15 p.m The acceptance was returned to Pollitt, and he subsequently initiated this action for temporary and permanent injunction and specific performance. The district court ruled that the $1,000 check, payable to and in the possession of Coldwell Banker during the period of this controversy was, by operation of law, converted into consideration for a thirty-day irrevocable option in favor of FDCK to purchase the riverfront property in accordance with the terms of Martin Marietta’s letter of September 7. Does a contract exist between Martin Marietta and FDCK? Explain.
The starting offer and the amount deposit of $1,000 by FDCK cannot be considered to be in an option contract as it was obvious that the parties included in the contract were skilled professionals in the business field and were not discussing an optional contract. Moreover, the professionals were discussing sales, which is unconditional.
The payment that has been given as an advance for the purchase is an experienced step. Therefore, there is no option for the contract to be revocable at a later stage. For the option contract, there has been no monetary support for the consideration.
Individual FDCK has accepted Individual MM's offer of selling their property before it was either withdrawn or revoked. This is because it is said that the offer is acceptable only if it is accepted before it is officially announced to be expired. It was obvious with the discussion with Individuals G and P knew that the agreement formed between Individuals MM and HL was a rightful contract and was made to purchase the property of riverside, thereby making the property unavailable for anyone else later.
As defined in the rule 63(a), an offer acceptance must be confirmed by sending a mail with a stamp and address. Individual FDCK's acceptance letter was with Individual P. The letter did not have any timestamp, which was later delivered by hand to Individual G at around 4:15 pm. This was after some time when he came to know about the property has been sold.
Individual FDCK did not accept Individual MM's letter to sell the property before knowing that the property at the riverside is no longer available.
No, there exists no contract between Individuals MM and FDCK because there is no consideration of the option in the contract that states that it can be withdrawn any time before acceptance.
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