Pennsylvania Court Finds That Seller’s Own Conduct Prevents Expectation of Specific Performance of a Contract

by Scott Parker on February 10, 2015

in Commercial Litigation

Pennsylvania Court Finds That Seller’s Own Conduct Prevents Expectation of Specific Performance of a ContractIn an action for specific performance of a real estate contract, a Pennsylvania court has ruled that an agreement cannot be invalidated on the basis of not meeting specific closing date requirements when a seller’s actions has led the buyer to believe that the date requirement would not be enforced.

In Dowd v. Scenic View Farms Inc., PICS Case No. 14-2091 (C.P. Carbon Dec. 15, 2014), John and Tina Dowd signed a purchase agreement on February 2, 2014, with Scenic View Farms, Inc.’s sole shareholder and officer, Peter Martin, for the purchase of the farm. The agreement called for a general warranty deed and settlement within 30 days (i.e. March 4, 2014). The agreement did not include a waiver of formal tender of the deed or of the purchase price, and stated that time was of the essence.

On February 13, 2014, the buyers received an email from the defendant’s son, Paul Martin, advising that it would take a few weeks to organize seller’s paperwork. On February 26, 2014, Paul Martin sent a second email requesting that the contract be cancelled.

On March 2, 2014, Paul Martin sent a follow-up email asking whether the buyers had decided to cancel. On March 3, 2014, the buyers responded, saying they wanted to close in March. On March 12, 2014, the buyers’ settlement agent sent seller documents to Paul Martin for signature and tentatively scheduled the closing for March 20, 2014.

On March 15, 2014, Paul Martin advised that because the closing had not occurred within the 30-day time period and time was of the essence, the buyers were in breach of contract and therefore, he was terminating the contract. In response, buyer’s counsel requested that the closing proceed. When the closing did not occur, the buyers sought specific performance.

In its findings, the Court concluded that the seller, by its own conduct, demonstrated that it did not intend to comply with the time constraints within the agreement. Therefore, the seller’s conduct precluded an expectation of strict performance of the contract.

PIB Law represents national banks, retailers, reinsurers, insurers, mortgage lenders and financial services companies from its offices in New Jersey, New York City, Boston, Chicago, San Antonio and Philadelphia. For more information, contact PIB Law at 908-725-9700.

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