Your business contracts will end in one or two ways. Either everyone will perform as agreed or someone will drop the ball causing you (or others) to incur losses.
Knowing this, it is imperative that you rely only on written agreements that can be enforced by the court if a dispute or lawsuit arises.
This fact was clearly evident in a case involving a dispute over a land contract a while ago…
How it started
A married couple was looking to buy real estate when they ran across land in central Florida. The property was under the control of 6 beneficiaries; 1 of which was the designated trustee.
The parties began to negotiate, exchanging multiple offers and counter-offers. After a bit of back and forth, an agreement between the trustee and buyers was reached.
While there were discussions about how the property could be used, specific deed restrictions were not included in the final contract. The following statement was added instead:
“Subject to buyer and seller agreeing on deed restrictions provided that none of the foregoing shall prevent use of the property for the purpose of building single family house.”
When agreements fall apart
After the beneficiaries realized the price the trustee agreed to was much lower than the appraised value of the property, they expressed concern and followed up with a list of proposed deed restrictions.
The buyers refused to agree to the restrictions without modifications – and the sellers refused to make any changes. The sellers asked the buyers to walk away from the land contract. In response, the buyers filed a lawsuit.
Two sides of the story
The buyers asked the court to enforce or reform the contract with or without the deed restrictions to prevent an injustice from taking place.
The sellers contended that because the contract did not include a list of specific restrictions it lacked essential elements that would make it enforceable under Florida law.
The court’s decision
The District Court of Florida agreed with the sellers and concluded that:
“A court has no right to write a contract for parties where none exists… [T]he deed restrictions were a material part of the proposed agreement. Until they were agreed upon no contract existed and the court could not supply them for the parties.”
This decision forced the buyers to either accept the sellers’ deed restrictions without modifications or walk away from the agreement to purchase. They chose the latter.
While this case involved a lawsuit over real estate, the court’s decision can apply to most any litigation matter where the contract in question is unenforceable – and thus, not worth the paper it’s printed on.
Don’t let this happen to you!
Download our free guide, Business Contracts Basics: What Every Florida Business Owner Must Know about Contracts, to take the first step towards making sure your business contracts are strong enough to withstand the court’s scrutiny.
