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Pescitelli v. Bay

A-4068-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; STATUTE OF FRAUDS—When parties negotiating over an expensive property begin with a broker prepared contract and exchange negotiation letters over a period of months, it is a strong indication they intended that their final agreement would be in signed, written form.

A broker-prepared contract was used for the sale of an expensive house. The contract contained a three-day attorney review period. Within the three-day review period, the buyer’s attorney sent a letter to the seller disapproving the contract. The seller also included suggested modifications and gave the seller the opportunity to accept the modifications by signing. Some of the modifications were acceptable to the seller; some were not. The seller’s attorney responded with modifications of his own. Then, the buyer’s attorney attempted to memorialize the changes to which the parties agreed, and sent another letter to the seller’s attorney. That letter was intended to set forth the terms of the agreement and stated that it was the most recent expression governing any prior inconsistencies. The letter also requested that the seller consent to the terms in writing. The seller never sent written consent. The buyer then withdrew his offer and the seller sued, seeking damages arising out of the buyer’s refusal to go to closing.

Although acknowledging that she never responded to the buyer’s final letter, the seller argued that the buyer’s actions up to that point demonstrated that the buyer believed a binding contract existed. Utilities had been placed in the buyer’s name; the buyer had received the keys to the house; and the buyer had access to the premises. Despite those claims, the lower court granted the buyer’s motion for summary judgment, finding that there was no written confirmation accepting the buyer’s final letter.

The Appellate Division rejected the seller’s claim that there was an oral contract, and that written acceptance was therefore unnecessary under the New Jersey Statute of Frauds. It concluded that the parties intended that the contract was to be in writing. This was a multi-million dollar real estate transaction with negotiations that began with a written broker-prepared contract. Negotiations extended over three months. There were numerous letters exchanging the parties’ positions. The initial offer was in writing, and all meaningful communications between the parties were in writing. This convinced the Court that the seller failed to establish, by clear and convincing evidence, that the parties intended to be bound by anything other than a writing, and since the seller failed to provide a written acceptance to the buyer’s last offer letter, there was no contract. For this reason, the Appellate Division affirmed the lower court’s decision in favor of the buyer.

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