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Powder Hollow Limited Partnership I v. Powder Hollow Associates

A-4682-96T5 (N.J. Super. App. Div. 1998) (Unpublished)

CONTRACTS; DRAFTING; SPECIFIC PERFORMANCE—Dealing with a poorly drafted contract without a definite time for closing, the court chose to terminate a contract rather than grant specific performance which would have required the court to monitor performance for ten or more years.

The matter before the court dealt with an unusual land sale contract which provided one price for a particular piece of property if an interstate highway interchange was constructed and about a 50% reduction in the purchase price if it was not. What the contract lacked, however, was a definite time at which closing would take place in the event that the interchange was not built. The contract contained elaborate provisions for the release of parcels over a period of ten or more years if the interchange remained unbuilt. When the seller demanded that the buyer close the transaction at the 50% price, the buyer refused to do so. The lower court concluded that the buyer had breached the contract.

On appeal, the buyer contended that even if the contract were interpreted so that non-construction of the interchange did not render it null and void, the contract should be declared to be unenforceable because it did not contain any mechanism for establishing the time for performance. In addition, relying on the doctrine of impossibility of performance, the buyer argued that the contract was unenforceable because each release of a parcel of land was contingent upon the construction of the interchange. The Appellate Division cited precedent to the effect that “in the usual case absent a ‘clear expression or a necessary implication’ setting a time for performance in a real estate contract, a reasonable time may be implied.” In this case, however, it declined to set such a time or to direct the Chancery Judge to do so. Even though each party asked for specific performance, the Appellate Division felt that an order requiring specific performance would be extremely difficult to enforce. As the Appellate Division read the contract, a requirement for performance within a “reasonable” time period would require the Chancery Judge to monitor the performance of the parties and their actions related to the contract for a period of ten years or more. “Our court system is not designed for this level of involvement in a private contractual matter.” The Appellate Division did not believe that it was wise to require the expenditure of valuable judicial resources on the management of “a poorly drafted private contractual agreement for a potential extended time period.” Furthermore, according to the Court, “in light of what has occurred over these many years from its inception, it would be unfair to require either party to perform further under the contract.” Therefore, the Appellate Division declared the contract to be at an end and remanded the matter to the Chancery Division for a determination of the monetary claims of each party.


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