Monday, January 6, 2014

Ferrero Construction Co. v. Dennis Rourke Corp. case brief

Ferrero Construction Co. v. Dennis Rourke Corp. case brief summary
536 A.2d. 1137 (1988)

CASE SYNOPSIS
Defendant seller sought review of an order of the Court of Special Appeals, Circuit Court for Montgomery County (Maryland) that held that the rule against perpetuities was inapplicable, that the right of first refusal was valid, and concluded that the seller and plaintiff purchaser had entered into an independent contract for the purchase and sale of the lot.

CASE FACTS
The purchaser and the seller entered into a contract for the purchase of two lots. The contract contained a first right of refusal on remaining lots. The seller notified the purchaser by mail of a third party offer to purchase one of the remaining lots and afforded him the opportunity to submit a contract. The purchaser immediately stated that it was exercising its right and submitted a contract. The seller rejected both offers. The purchaser brought an action for specific performance.

PROCEDURAL HISTORY
The trial court ruled the right of first refusal violated the rule against perpetuities and was void and that the parties had not formed a contract. The court of special appeals reversed. The appellate court granted the seller's petition for writ of certiorari.

DISCUSSION

  • The court ruled that the rule against perpetuities applied to the rights of first refusal and determined that the purchaser's right of first refusal was not limited to a term of years, but was of unlimited duration because the right was conveyed between two corporations, which had a perpetual existence. 
  • The circuit court correctly held that the right of first refusal violated the rule against perpetuities and was unenforceable.

CONCLUSION
The judgment of the court of special appeals was reversed, and the case was remanded with directions to affirm the judgment of the circuit court.

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