Wednesday, March 20, 2013

GMH Associates, Inc. v. Prudential Realty Corp. case brief

GMH Associates, Inc. v. Prudential Realty Corp. case brief summary
752 A.2d 889

SYNOPSIS: Appellants filed an appeal from a judgment of the Court of Common Pleas of Delaware County (Pennsylvania), which awarded appellee both compensatory and punitive damages in a commercial real estate sale action.

OVERVIEW: Although the parties signed a letter of interest to sell commercial real estate, they continued negotiating price, tenant improvement, and commissions. Appellee sent another letter with new terms, however, appellants rejected appellee's bid and sold the property to another buyer. Appellee sued, alleging breach of contract and fraudulent misrepresentation. The trial court awarded appellee damages, concluding an enforceable oral contract had existed.

HOLDING:
Upon appeal, the court reversed because the trial court improperly concluded an oral contract existed.

ANALYSIS:
It was clear from both letters of interest that the parties always intended that any binding transaction to convey the property would be accomplished by a written contract. Thus, there was no breach of contract when appellants failed to sell the property to appellee. Appellants were under no legal duty to reveal its negotiations with another buyer, thus, there was no fraud, and appellants were entitled to judgment notwithstanding the verdict.


RULES:
-Where the parties have agreed orally to all the terms of their contract, and a part of the mutual understanding is that a written contract embodying these terms shall be drawn and executed by the respective parties, such oral contract may be enforced, though one of the parties thereafter refuses to execute the written contract.
-The essential terms that must be identified and agreed to in order to form a valid contract for the sale of real estate are the naming of the specific parties, property and consideration or purchase price. -Where the existence of an informal contract is alleged, it is essential to the enforcement of such an informal contract that the minds of the parties should meet on all the terms as well as the subject matter.
-If anything is left open for future negotiation, the informal paper cannot form the basis of a binding contract

OUTCOME: Judgment notwithstanding the verdict in favor of appellants was ordered. The letter of intent did not disclose any agreement, not even an agreement to negotiate. Instead, it provided specifically that neither party was to be bound until a mutually satisfactory lease had been negotiated and executed.

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