General

Procedural Posture

Appellant buyer challenged the order of the Superior Court of Sonoma County (California), finding him guilty of breach of a real estate sales contract and awarding respondent seller liquidated damages and attorney’s fees.

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Overview

Appellant buyer signed an agreement to purchase respondent seller’s home. Neither of their wives signed the agreement. The sale was never consummated. Respondent brought an action for breach of contract. Appellant argued there was no binding contract because the wives did not sign the instrument. The trial court found appellant guilty of breach of contract and awarded damages to respondent. On appeal, the court affirmed the judgment. Since appellant did not show he only intended to be bound by the contract if all parties signed the instrument, the instrument was valid and binding. It was foreseeable that respondent would incur expenses in connection with purchasing a new residence if appellant defaulted. The liquidated damages clause was valid because such amount was reasonable in light of anticipated harm, regardless of the fact that it exceeded the legal interest rate.

Outcome

The trial court’s judgment was affirmed because the instrument was valid and binding where appellant failed to show he only intended to be bound if all parties signed the instrument, and the liquidated damages clause was valid where the amount was reasonable in light of anticipated harm.

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