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Law School Case Brief

Bd. of Control v. Burgess - 45 Mich. App. 183, 206 N.W.2d 256 (1973)

Rule:

That which purports to be an option for the purchase of land, but which is not based on valid consideration, is a simple offer to sell the same land. An option is a contract collateral to an offer to sell whereby the offer is made irrevocable for a specified period. Ordinarily, an offer is revocable at the will of the offeror. Accordingly, a failure of consideration affects only the collateral contract to keep the offer open, not the underlying offer. 

Facts:

Plaintiff university entered into a contract with a land owner that appeared to give the university a 60-day option to purchase defendant property owner's house. The university never paid the stated one dollar consideration or any other consideration. Subsequently, the university delivered written notice to the property owner of its intention to exercise the option, but the property owner rejected the university's tender of the purchase price. The university brought an action against defendant property owner for specific performance. The Circuit Court entered judgment for the university. The property owner appealed.

Issue:

Was the document signed by defendant property owner an enforceable option by which plaintiff university could purchase the property?

Answer:

No

Conclusion:

The Court of Appeals of Michigan reversed the judgment and remanded for additional findings of fact. Because the property owner received no consideration for the purported option, the Court held that the document was not an enforceable option and that the property owner was not barred from so asserting. Therefore, the Court concluded that the transaction was a simple offer to sell the property. The Court could not resolve the question of whether the property owner effectively revoked her offer to sell before the university accepted the offer because there was conflicting testimony as to when the property owner informed the university that she would not abide by the option agreement. The Court concluded that the trial court did not err in finding that there was no fraud, material mistake, or coercion.

 

 

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