Is Performance Enough? - New Law Changes the Rules on Contracts
November 28, 2005
Michael J. Grilli, Esquire
In today’s business environment, you most likely deal with contracts on a daily basis. You draft and negotiate and can quote boilerplate language in your sleep. You could always rely on the fact that regardless of the battles that must be fought to get both sides to perform duties under a contract, once it was done, it was done.
This was until recently.
The Massachusetts Appeals Court has recently held that even if a contract is completed, and both sides got what they bargained for, one party may still sue the other for breach of contract.
The case of Perroncello v. Donohue, may very well change the way that many practitioners draft their contracts and how they negotiate with each other while performance of the contract is pending. What follows is a brief description of the case.
In Perroncello, the Buyer and Seller negotiated the purchase of a piece of real estate for $2,250,000.00. The contract called for the purchase to take place on a certain date with a non-refundable deposit of $150,000.00. The contract also stated that “time is of the essence”, and called for the deposit to be the measure of damages, should the closing not take place on time. The Buyer was unable to get his financing in place, and he asked for an extension to the closing date. There was no written extension, and subsequently the Seller sued the Buyer seeking consummation of the deal.
After a period of litigation, the deal finally closed. The Seller received the entire purchase price, and the Buyer paid a considerable amount of carrying costs on the property during the period between the original closing date and the date upon which the property did actually close.
Under most circumstances, you would think this is where the story ends. However, in this case, the Seller was not satisfied and sued for the $150,000.00 in damages...
You may read more at the link below.
BusinessWest
November 14, 2005
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