Case Law Summaries

Kaplan Companies v. Cloverdale Road, L.P.

• Opinion Date: June 27, 2001
• Real Property Law
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STATUTE OF FRAUDS—Where parties had been negotiating for the sale of a sizable tract of land involving complex issues and contingencies, a letter outlining the terms that had been brokered was held not to be an enforceable contract.

A property buyer entered into preliminary negotiations with a seller. A two-page letter arose from these negotiations, outlining the terms that had been brokered including the purchase price, the amount due at signing, and the interest rate on the note. The letter concluded by stating: “If the foregoing terms are acceptable, kindly indicate so below and provide us with a signed copy of this letter. We can then discuss the drafting of an appropriate contract.” The seller and the seller’s agent both signed the letter under the term “Agreed and accepted.” The buyer later tried to enforce the letter as a binding contract. The lower court refused, and the Appellate Division upheld, finding no proof that the letter was an “objective manifestation” of either the buyer’s offer or the seller’s acceptance. “It is axiomatic that a contract cannot come into being without an unequivocal manifestation of mutual assent by both parties to the same terms. ... Mutual assent depends not upon the actual intent of the parties, but on their manifested intentions.” The Court took into consideration that both parties were sophisticated business entities, well versed in real estate development, and negotiating for a sizable tract of land for a sizable amount of money. “We would be remiss if we were to ignore the reality that such transactions involve complex issues and contingencies generally memorialized in detailed and voluminous contracts. ... It is doubtful that these two sophisticated entities would bind themselves to a transaction of the magnitude contemplated in a mere two page letter.” Although the Court recognized that parties may bind themselves by an informal memorandum where they intend to be bound, this was not one of those instances. The letter clearly intended for there to be further discussion, and was in no way meant to bind.

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