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Humble Oil & Ref. Co. v. Westside Inv. Corp. - 428 S.W.2d 92 (Tex. 1968)

Rule:

The mere fact that the parties may choose to negotiate before accepting an option does not mean that an option contract is repudiated.

Facts:

Petitioner, Humble Oil & Refining Company, entered into an agreement with respondent Westside Investment Corporation to purchase real estate through an option contract. Petitioner, Marvin H. Mann, a realtor, as a third-party plaintiff, filed a plea in intervention, seeking a judgment for $1260 against Westside as brokerage charges in connection with the transaction. A written option contract was executed between the parties and earnest money exchanged.  When a letter of amendment was sent to Humble, it did not reply but instead, submitted the remainder of the earnest money into escrow pursuant to the terms of the option contract. Westside  argued that the inaction of Humble meant that it had rejected the option contract. The lower court dismissed the claim for specific performance for the purchase of real property. Westside, Humble and Mann each filed a motion for summary judgment. The court granted Westside's motion and overruled the motions of Humble and Mann. The court of civil appeals affirmed.

Issue:

Is an option contract a binding obligation between the parties even if a buyer failed to reply to the letter of amendment that was sent by the seller?

Answer:

Yes.

Conclusion:

The court reversed the judgment of the trial court and held that Humble 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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