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The requirement that agreements regarding the sale of real property be in writing and signed by the person to be charged seeks to avoid misunderstandings about their terms and nature. Historically, the courts of Tennessee have held that, although the form of a writing is immaterial, to be enforceable under the statute of frauds a signed writing must express the essential terms of the agreement with a degree of certainty such that the agreement of the parties can be determined without recourse to parol evidence. The court notes, however, that in land contracts, once the grantor conveys the real estate, the buyer's return promise to pay for it becomes enforceable without reference to the statute of frauds; in that case the statute provides no defense to the buyer's failure to pay.
The buyers, plaintiffs Herschel and Shirley Brewer, paid the seller, defendant James Ball, a significant amount towards the purchase of the seller's property. Although the buyers sent proposed contracts to the seller, no written contract was ever executed. A dispute between the parties arose and the buyers brought the present action for damages and declaratory and injunctive relief in the Chancery Court of Rutherford County. In their complaint, the buyers prayed the court for a decree declaring that no contract had been formed by the parties as no meeting of the minds had occurred. The buyers further prayed for the return of the money advanced to the seller. The seller counterclaimed, alleging breach of contract, deceit, fraud, and seeking restitution. The buyer answered the seller’s counterclaim, denying the allegations and raising as a defense, the statute of frauds. The trial court determined that no contract had been formed with the statute of frauds, and thereby awarded the buyers a return of their deposit monies and prejudgment interest. The seller appealed.
Did the parties execute an agreement or writing that would satisfy the statute of frauds applicable to the sale of real property?
After modifying prejudgment interest, the court affirmed. It was clear that the parties never executed a writing that would have indicated a meeting of the minds, for purposes of Tenn. Code Ann. § 29-2-101(a) (2000). There was no writing signed by the buyers with which to charge them, and the court agreed that there was no enforceable contract under the statute of frauds that would have entitled to seller to retain the money deposited by the buyers. Even if the court agreed with the seller's argument that an agreement proposed by the buyers represented a meeting of the minds regarding the purchase price, there was nothing in the agreement that entitled to the seller to retain the deposit. The court rejected the seller's claim that the trial court erred in not finding that the buyers acted fraudulently or did not negotiate in good faith.