Opinion ID: 2381559
Heading Depth: 1
Heading Rank: 1

Heading: Method of Fixing the Price

Text: The Plummer-Haley agreement set a fixed price of $100,000. This price was lower than the market value of the residence at the time the right was given and less than half the value of the property at the time that Haley exercised his right. In Low, we recognized that [a] fixed price has a tendency to impose a serious restraint. Id. We further explained the reason for this effect: [I]f the pre-emptive right requires that the property be offered at much less than its value at the time of the proposed sale, there is an obvious check upon alienation, since the owner will retain the property rather than sell it at a great sacrifice. Any pre-emption exercisable at a fixed price is likely to involve sacrifice to the person bound to offer it, since a fixed price is usually based upon the value of the property when the pre-emptive provision is executed. Id. ( quoting 6 American Law of Property § 26.65 (1952)). This statement about a check on alienation assumes an owner who can avoid selling the property at the fixed price for a long period of time. That assumption about a restraint of long duration does not necessarily apply to every situation. Thus, we must consider the fixed price in relation to the duration of the restraint and the purpose it serves. See Low, 629 A.2d at 59; Kershner v. Hurlburt, 277 S.W.2d 619, 626 (Mo.1955). See also Tovrea v. Umphress, 27 Ariz.App. 513, 556 P.2d 814, 819-20 (1976) (fixed-price restraint with legitimate business purpose upheld as a reasonable restraint); Colby v. Colby, 157 Vt. 233, 596 A.2d 901, 904 (1990) (fixed-price preemptive right serving to encourage alienation of land upheld as reasonable); Lawson v. Redmoor Corp., 37 Wash.App. 351, 679 P.2d 972, 975 (1984) (fixed price restraint for an unlimited duration upheld where agreement furthered a legitimate purpose).