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On the Hill Realty, LLC v. Kelly

2005 WL 1252340 (N.J. Super. Ch. Div. 2005) (Unpublished)

CONTRACTS; SPECIFIC PERFORMANCE — A party may be ordered to specifically perform on a land sale contract even if it has not been reduced to writing so long as he or she agreed to all of the essential terms of the contract.

A realty company negotiated to buy a seller’s property and business. The realty company’s attorney reduced the negotiations into a written contact. Several versions of the contract were sent back and forth between the parties. After a year of negotiations, the realty company was prepared to sign the contract, but the property owner refused to sign. The realty company filed an action seeking specific performance on the contract. The property owner filed a motion to dismiss the complaint for failure to state a claim. In support of its application, it asserted that specific performance was not an available remedy because neither a written nor oral agreement was reached between the parties. In response, the realty company argued that a written contract had been reached between the parties, but the property owner refused to execute the contract only because it found a third party willing to pay a higher purchase price. It further argued that the conduct of the property owner indicated that an agreement had been reached. For example, the property owner introduced its staff to the realty company as the new owners. The realty company also asserted that it relied on the owner’s conduct by closing its other business three months early. It contended that the owner breached the covenant of good faith and dealing by refusing to perform on the contract after it had agreed to all of the terms.

The Court denied the property owner’s motion to dismiss. When analyzing motions to dismiss for failure to state a claim, a court must determine whether a plaintiff could sustain a viable claim in law if the allegations in the complaint were true. In applying this standard, the Court found that the realty company had raised a viable claim in its assertion that all of the essential terms of the contact had been established, and the property owner refused to sign the contract because it had been presented with a higher offer. It further held that the realty company might be able to prove promissory estoppel because it relied on the conduct of the owner to its detriment.

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