IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

Assigned on Briefs January 4, 2017

BULL MARKET, INC. v. ADEL ELRAFEI

Appeal from the Circuit Court for Tipton County

No. 7284 Joseph H. Walker, III, Judge

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No. W2016-01767-COA-R3-CV

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A purchaser of property entered into an installment contract and signed a promissory note 

specifying the day on which monthly payments were to be made. The purchaser began 

making payments on different days of the months and the seller accepted these payments 

over a course of years. Over seven years after the contract was executed, the seller 

sought to declare the contract null and void because the purchaser failed to tender his 

payment on the day specified in the note. The trial court awarded the seller relief and 

granted it possession of the property. The purchaser appealed, and we reverse the trial 

court’s judgment. We conclude the parties modified the terms of the promissory note 

through their course of conduct and that the purchaser did not breach the contract. 

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Reversed

ANDY D. BENNETT, J., delivered the opinion of the court, in which CHARLES D. SUSANO,

JR., and KENNY W. ARMSTRONG, JJ., joined.

Mark J. Grai, Memphis, Tennessee, for the appellant, Adel Elrafei.

Ross E. Webster, Memphis, Tennessee, for the appellee, Bull Market, Inc.

OPINION

I. FACTUAL AND PROCEDURAL BACKGROUND

Bull Market, Inc. (“BMI”) and Adel Elrafei executed a Contract for Deed (the 

“Contract”) on January 1, 2009, in which Mr. Elrafei agreed to purchase a convenience 

store and fuel pumps from BMI for the sum of $300,000. The Contract specified that Mr. 

02/03/2017
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Elrafei was to pay $15,000 at the closing and then pay the balance of $285,000 over the 

course of ten years as set forth in a promissory note. Paragraph 7 of the Contract 

provides:

That Purchasers agree that in the event they:

a. Fail to pay the monthly installments required by the promissory note 

within fifteen (15) days after due date;

b. Violate any of the provisions of the Security Agreement;

c. Fail to maintain the required policies of insurance; 

d. Fail to pay any city or county property taxes assessed against the 

property;

Sellers may then, at their sole option, declare that this Contract is null and 

void without notice and that Sellers will retain all payments previously 

made hereunder by Purchasers as rents and liquidated damages. Then, in 

such event, Sellers shall give Purchasers written notice of default which 

shall be considered as cancellation of Purchasers’ rights under this Contract 

for Deed. That [upon] cancellation of this Contract, Purchasers agree that 

they will surrender possession of the premises and furniture, fixtures, 

equipment, and inventory located at 510 Hwy 51 North, Covington, Tn 

38019, to Sellers.

Mr. Elrafei executed a promissory note in the amount of $285,000 on an 

unspecified day in January 2009. In the note, Mr. Elrafei promised to pay BMI “monthly 

installments” in the amount of $3,022.87 beginning on February 1, 2009, “with future 

installments being due and payable on the 1st day of each succeeding month thereafter 

until principal and interest are paid in full.” The promissory note identifies the maturity 

date as January 1, 2019.

The parties entered into a Fuel Supply Agreement on July 22, 2009. As part of 

this agreement, the parties agreed to reduce Mr. Elrafei’s monthly payments to $1,500. 

Paragraph 26 of this agreement states:

CONTRACT FOR DEED MODIFICATION. Both parties agree to change 

the terms of the Promissory Note associated with the Contract for Deed 

dated January 1, 2009. The new promissory note will replace the one 

date[d] 1/1/09.

Despite the language of paragraph 26, the parties did not replace the initial promissory 

note. Neither BMI nor Mr. Elrafei prepared another promissory note setting forth the 
3

reduced monthly installment payments. Both parties agree, however, that BMI provided 

Mr. Elrafei with a modified amortization schedule that specified the monthly payments 

were to be in the amount of $1,500.

Mr. Elrafei made monthly payments to BMI, but the dates of the payments varied 

from month to month. The record shows that Mr. Elrafei made his monthly payments 

online, through BMI’s bank. For the first eight months of 2015, BMI’s bank account was 

credited with $1,500 on the following dates: January 16, February 18, March 13, April 

16, May 18, June 16, July 16, and August 18.1

On August 18, 2015, BMI’s attorney sent an e-mail to Mr. Elrafei terminating the 

Contract. The e-mail stated, in pertinent part:

As of this date, Bull Market, Inc. has not received the August payment due 

under the Contract for Deed. Paragraph 7 of the Contract for Deed requires 

that the payment be received within 15 days of its due date, which is the 1st

of each month. Bull Market, Inc. has chosen, as is its right under Paragraph 

7, to declare the Contract for Deed null and void. Although no notice is 

required prior to deeming the Contract for Deed null and void, we are 

submitting this written notice of cancellation of the Contract for Deed. 

Paragraph 7 also states that Mr. Elrafei will surrender possession of the 

premises. Please advise as to whether Mr. Elrafei will tender possession of 

the premises by August 28, 2015. If not, we will move forward to obtain 

possession through the courts and seek attorney’s fees for same.

Bull Market, Inc. has no intention to accept any payments from Mr. Elrafei 

for the amounts that were due on August 1, 2015. Please do not attempt to 

make payment. Any payments received are deemed late and will not be 

accepted whether received or not.

BMI returned Mr. Elrafei’s August payment on August 24. Once Mr. Elrafei 

learned that BMI had rejected his August online payment, he made a cash deposit of 

$1,500 into BMI’s account on August 28, which BMI retained. BMI filed a Forcible 

Entry and Detainer Warrant with the Court of General Sessions in Tipton County on 

August 28, 2015. A trial was held on October 15, 2015, and judgment was entered for 

BMI. The court wrote: “Rent pd is to be kept by Owner as payment for occupancy that 

has occurred.”

Mr. Elrafei appealed the case to circuit court, and that court held a trial on July 19, 

2016. Mr. Elrafei testified on his own behalf and Reagan Burford, who was employed by 

BMI, testified on behalf of BMI. Mr. Burford testified that Mr. Elrafei made his 

 

1BMI’s record shows that Mr. Elrafei continued to make monthly payments each month through the time 

of trial, which was in July 2016, and that he was not in arrears for any month. 
4

monthly payments “when he wanted to pay,” that “several” payments were made after the 

fifteenth day of the month, and that Mr. Elrafei was “habitually late.” Mr. Burford 

testified that in December 2012 Mr. Elrafei submitted his payment on the seventeenth day

of the month. When Mr. Elrafei’s attorney asked whether Mr. Burford declared Mr. 

Elrafei in default in December 2012 because that payment was late, Mr. Burford 

responded that he “didn’t choose to at that time.” In response to additional questions 

from Mr. Elrafei’s attorney, Mr. Burford testified as follows:

Q: Why was it August of 2015 that you decided you had enough after 

years, literally years, of late payments? Why was that?

A: You know, I don’t know what a year ago was, but I can tell you this. 

One, two, three, four, five, six in a row being late. So we just chose at that 

time - -

. . . .

We had just had enough.

Mr. Elrafei testified that he always made the payments by way of bank wire 

transfer and that he believed the payment date was the fifteenth day of the month. Mr. 

Elrafei testified that he always paid on time in accordance with his understanding that the 

payments were due on the fifteenth day of the month: 

Your Honor, I always make the payment from a bank wire transfer. I make 

it on the 15th, it go for the next business day. It happens 2016 the 15[th] 

match a certain day. So it will go for the next business day, which is the 

17th.

. . . .

I pay it on the 15th. If I find it’s a Saturday – Sunday, I will go back up and 

pay it on that Friday or Thursday, and it will hit their account on the 16th, 

17th. Never happened it hit on the 19th, never happened.

The trial court entered an order on July 20, 2016, finding in favor of BMI. The 

court wrote, in pertinent part:

The court finds that the terms of the note were amended by 

agreement of the parties to a monthly payment of $1,500.00. The note 

required payment on the 1st of the month.

. . . .
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There is no dispute that the August 2015 payment was not made on 

August 1, or within fifteen days after due date. The note waives demand 

and notice. Purchaser attempted payment eighteen days after due date.

Seller gave written notice of default, which shall be considered as 

cancellation of Purchasers’ rights under the Contract for Deed. Purchasers 

agree that they will surrender possession. Sellers retain all payments.

The Court finds that under the terms of the Contract, Sellers are 

entitled to possession of the premises.

Mr. Elrafei appealed, arguing that the trial court erred by failing to find that the 

parties modified their agreement through their course of conduct and that the trial court 

should have concluded that, as modified, Mr. Elrafei’s installment payments were not due 

until the fifteenth of the month.

II. ANALYSIS

The resolution of this case depends on the interpretation of the parties’ contracts. 

Contract interpretation involves an issue of law, which we review de novo. Maggart v. 

Almany Realtors, Inc., 259 S.W.3d 700, 703 (Tenn. 2008); Guiliano v. Cleo, Inc., 995 

S.W.2d 88, 95 (Tenn. 1999); German v. Ford, 300 S.W.3d 692, 701 (Tenn. Ct. App. 

2009). We afford no presumption of correctness to the trial court’s interpretation of 

contracts. Maggart, 259 S.W.3d at 703; German, 300 S.W.3d at 702.

After a contract is made, it may be modified by express agreement or by conduct 

that evidences the contracting parties’ consent. Lancaster v. Ferrell Paving, Inc., 397 

S.W.3d 606, 611-12 (Tenn. Ct. App. 2011). A modification has been defined as ‘“a 

change to one or more contract terms which introduces new elements into the details of 

the contract, or cancels some of them, but leaves the general purpose and effect of the 

contract undisturbed.’” Id. (quoting Constr. Crane & Tractor, Inc. v. Wirtgen Am., Inc.,

No. M2009-01131-COA-R3-CV, 2010 WL 1172224, at *10 (Tenn. Ct. App. Mar. 24, 

2010) (further citation omitted)). A party’s agreement to modify a contract ‘“need not be 

express, but it may be implied from a course of conduct.”’ Id. at 612 (quoting Constr. 

Crane & Tractor, 2010 WL 1172224, at *10. The parties’ course of conduct in carrying 

out the contract is the best evidence of their original intent. Univ. Corp. v. Wring, No. 

W2011-01126-COA-R3-CV, 2012 WL 4078517, at *6 (Tenn. Ct. App. Sept. 18, 2012) 

(citing Long v. Langley, W2001-01490-COA-R3-CV, 2002 WL 818224, at *5 (Tenn. Ct.

App. Apr. 23, 2002). A new contract is created when a contract is modified, but the 

original contract is still in effect to the extent that its terms have not been modified. 

Constr. Crane & Tractor, 2010 WL 1172224, at *10. 

Mr. Burford testified that Mr. Elrafei’s December 2012 payment was made on 

December 17 and that Mr. Elrafei made late payments in 2013. Other than this 
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testimony, the record does not reveal the dates on which Mr. Elrafei tendered his monthly 

payments in the years 2009, 2010, 2011, 2012, 2013, or 2014. No evidence was 

introduced suggesting that Mr. Elrafei missed any payments. BMI’s bank transaction 

report for the year 2015 shows that BMI accepted Mr. Elrafei’s payments after the 

fifteenth of the month in January, February, April, May, June, and July. The payments 

were credited to BMI’s account on the eighteenth of the month in February, May, and 

August. Mr. Elrafei testified that as a result of an altercation with BMI in December 

2012, he began submitting his installment payments on or near the fifteenth of the month. 

In reliance on BMI’s ongoing acceptance of his payments on or after the fifteenth of the 

month, Mr. Elrafei followed the same course of conduct in August 2015, when BMI’s 

account was credited with his $1,500 payment on August 18. Mr. Burford testified that 

BMI’s failure to receive Mr. Elrafei’s August 2015 payment on or before August 15 is 

what caused BMI to initiate the forfeiture proceedings. 

We conclude, based on the evidence, that the parties modified the promissory note 

with regard to the monthly amount, the maturity date, and the day of the month when the 

payments are due. When BMI and Mr. Elrafei entered into the Fuel Supply Agreement 

on July 7, 2009, they expressly agreed to change the monthly amount from $3,022.87 to 

$1,500 and to change the maturity date from January 2019 to January 2038. They 

modified the day of the month when the payments are due through their course of 

conduct, which the evidence reveals began as early as 2012 and continued through the 

time BMI initiated suit. As a result of the parties’ course of conduct, the due date for the 

monthly payments has been changed from the first to the fifteenth day of each month. In 

accordance with paragraph 7 of the Contract, BMI may not declare the Contract “null and 

void” unless Mr. Elrafei fails to tender his monthly payment within fifteen days following 

the fifteenth of the month. See Lively v. Drake, 629 S.W.2d 900, 903-04 (Tenn. 1982) 

(concluding payors were led to believe irregular payments would continue to be accepted 

without acceleration and that agreement was modified by parties’ course of conduct). 

This case is distinguishable from Dacus v. Weaver, 1988 WL 138918 (Tenn. Ct. 

App. Dec. 28, 1988), upon which BMI relies. In Dacus, not only did the payors remit 

their payments late, they skipped payments entirely on several occasions. Dacus, 1988 

WL 138918, at *1-2; see also Jerles v. Phillips, No. M2005-1494-COA-R3-CV, 2006 

WL 2450400, at *9 (Tenn. Ct. App. Aug. 22, 2006) (holding contract terms were not 

modified where payors could not show course of conduct was established and accepted 

by payee). No evidence was introduced in this case that Mr. Elrafei missed any payments 

from January 2009 through July 2016, when the trial took place. Finally, we note that 

“equity abhors a forfeiture” and that equity “construe[s] a contract against the party 

seeking to enforce a forfeiture.” Knapp v. Robbins Props., Inc., 1985 WL 4912, at *2 

(Tenn. Ct. App. Dec. 31, 1985).
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III. CONCLUSION

The trial court’s judgment awarding possession of the property to BMI is reversed

and remanded for further proceedings consistent with this opinion. Costs of this appeal 

shall be taxed to the appellee, Bull Market, Inc., for which execution shall issue if 

necessary.

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ANDY D. BENNETT, JUDGE