Sterling v. Taylor

40 Cal. 4th 757, 55 Cal. Rptr. 3d 116, 152 P.3d 420 (2007)

 

RULE:

A memorandum satisfies the statute of frauds, Civ. Code, § 1624, if it identifies the subject of the parties' agreement, shows that they made a contract, and states the essential contract terms with reasonable certainty. Only the essential terms must be stated, details or particulars need not be. What is essential depends on the agreement and its context and also on the subsequent conduct of the parties. 

FACTS:

The buyers sued the sellers for breach of a written contract to sell apartment buildings for $ 14,404,841. The trial court granted the sellers' motion for summary judgment but on appeal it was reversed. The case was remanded for summary adjudication in the sellers' favor. The case was appealed to the Supreme Court of California. The sellers argued that the intermediate appellate court improperly considered extrinsic evidence to resolve uncertainties in terms identifying the seller, the property, and the price. 

ISSUE:

Should the case be dismissed?

ANSWER:

Yes

CONCLUSION:

The instant court concluded that the intermediate appellate court properly considered the parties' extrinsic evidence, but erred in deeming it legally sufficient under the statute of frauds to establish the price sought by the buyers. The buyers sought to enforce a price term that lacked the certainty required by the statute of frauds. The extrinsic evidence offered by the buyers was at odds with a memorandum drafted by their agent. The memorandum stated a specific price and did not indicate that the parties contemplated any change based on actual rental income. The evidence was insufficient to show with reasonable certainty that the parties understood and agreed to the price sought by the buyers. The price term stated in the memorandum, considered together with the extrinsic evidence of the contemplated price, left a degree of doubt that the statute of frauds did not tolerate. Therefore, the trial court properly granted summary judgment in favor of the sellers.

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