Wednesday, December 4, 2013

Smith v. Wheeler case brief

Smith v. Wheeler case brief summary
210 S.E.2d 702 (1974)


CASE SYNOPSIS
Defendant optionee challenged the judgment of the Rockdale Superior Court (Georgia), which held that plaintiff optionor's contract agreement giving the optionee a right to purchase real estate was not binding, because the optionee failed to give one dollar in consideration for the option agreement as required by the contract.

CASE FACTS
The optionor and the optionee entered into a contract for optionee to have an option to buy the optionor's real estate within one year. The option agreement, signed by both parties, stated that the option was given in consideration of the sum of one dollar, receipt whereof was acknowledged. Nevertheless, it was undisputed that the one dollar consideration cited in the agreement was not paid at the time of execution. Thereafter, the optionor sent a letter to optionee, stating that because the consideration had not been paid, it was withdrawing the option. Within one year of the original contract, the optionee attempted to purchase the real estate and informed the optionor, who refused to hand over legal title. The optionor then filed suit, claiming that the optionee's claim placed a cloud over his title. The trial court found in the optionor's favor, and optionee appealed the ruling.

DISCUSSION
The court reversed, holding that the option to buy the real estate was enforceable, even though the optionee failed to deliver the one dollar recited in the contract, because the recital to pay a nominal consideration gave rise to an implied promise to pay which could be enforced by the other party.

CONCLUSION
The court reversed the judgment of the lower court, holding that the recital to pay a nominal consideration for an option to buy real estate was binding, even though the consideration had not been paid, because the recital to pay a nominal consideration gave rise to an implied promise to pay which could be enforced by the other party.


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