Tuesday, March 26, 2013

Humble Oil & Refining Co. v. Westside Investment Corp. case brief

Humble Oil & Refining Co. v. Westside Investment Corp. case brief summary
428 S.W.2d 92 (Tex. 1968)

Petitioner appealed the judgment of the Bexar County Civil Court, Fourth District (Texas), which dismissed his claim for specific performance of an option contract for the purchase of real estate.

OVERVIEW: Petitioner entered into an agreement with respondent to purchase real estate through an option contract. A written option contract was executed between the parties and earnest money exchanged. Subsequently, a letter of amendment to the contract of sale, subject to the option contract, was sent to petitioner requesting his signature; petitioner did not reply but deposited the remainder of the earnest money into escrow pursuant to the terms of the option contract. Respondent contended that petitioner rejected the option contract by respondent's subsequent letter of amendment.

-The Petitioner successfully argued that the option contract was an independent agreement that required him to do no more than he did.

-Additionally, he was not foreclosed from negotiations relative to the contract of sale, as distinguished from the option.
-As such, petitioner did not surrender or reject the option and it was a binding obligation between the parties.

-Where an original offer is an irrevocable offer, creating in the offeree a binding option, the rule that a counter offer terminates the power of acceptance does not apply.
-Even if it is reasonable to hold that it terminates a revocable power, it should not be held to terminate rights and powers created by a contract.
-A binding option is such a contract and an offer in writing, that allows a time for acceptance either definite or reasonable and that is irrevocable by virtue of a statute, is itself a unilateral contract.
-A counter offer by such an offeree, or other negotiation not resulting in a contract, does not terminate the power of acceptance

OUTCOME: The court reversed the judgment of the trial court and held that petitioner was entitled to specific performance of the option contract, because the option contract was an independent agreement between the parties and did not terminate negotiations regarding the contract of sale.

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