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Dhall v. 700 Grove Street Urban Renewal, L.L.C.

A-5498-08T3 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTS; RESCISSION — An amendment to a contract for the sale of a new condominium unit does not require inclusion of a seven day cancellation notice, as is required of new condominium contracts under law, when the amendment unambiguously provides that it is to become part of the original agreement.

A buyer signed a nine page purchase agreement for a specific condominium unit. It had an arbitration clause whereby the parties agreed to arbitrate all disputes under the agreement, contractual, statutory or otherwise. There was a considerable delay in preparing the unit for occupancy, and the parties amended the agreement, designating a different unit. The amendment’s clear language made it a part of the original purchase agreement such that all of the other terms and conditions of the agreement remained in full force and effect.

The buyer sued to void the amended purchase agreement and obtain return of his security deposit. He argued that execution of the amendment invalidated the original purchase agreement because it did not include a seven day cancellation notice as required under law, and did not contain certain language mandated to be included in a contract for the sale of real estate. The seller moved to dismiss the complaint and compel arbitration.

The lower court dismissed the complaint and compelled arbitration, finding the arbitration clause was unambiguous and sufficiently broad to cover the disputed claims. It found no evidence to suggest that the amendment affected the validity of the terms of the arbitration provision. It also denied the buyer’s motion for reconsideration. The buyer appealed.

The Appellate Division affirmed substantially for the reasons stated by the lower court. It added that the amendment unambiguously provided that it was to become part of the original agreement, and it contained language that all other terms and conditions contained in the agreement remained in full force and effect. The Court said the buyer knew what was in the original agreement, because he initialed every one of its pages and specifically initialed the arbitration clause. The buyer contended that he did not have sufficient time to review the amendment, and that his attorney did not review it, but the Court held that only a claim of fraud or duress relating to the arbitration clause itself would defeat a requirement that the matter be arbitrated. It held that the buyer’s claim of fraud in the inducement of a contract was a matter for arbitration. It also held the arbitration clause specifically encompassed the buyer’s statutory claims, and that his specific claims for return of his deposit, based on either a statute or on breach of contract, fell squarely within the scope of the arbitration clause.

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