Opinion ID: 2634665
Heading Depth: 2
Heading Rank: 2

Heading: existence of option

Text: ¶7 A contract, such as an option, must have definite terms, including the option price, or else it cannot be enforced by a court. Nielsen v. Gold's Gym, 2003 UT 37, ¶ 11, 78 P.3d 600. Because the parties' purported agreement for Carter to buy back any portion of the property Sorensen purchased contains no ascertainable price term, the agreement is unenforceable and the trial court's order must be affirmed. ¶8 The parties clearly intended to create an enforceable option agreement allowing Carter to buy back all or part of his farm from Sorensen. However, as a matter of law, they failed to do so because they did not include an identifiable price term for a purchase of less than the entire property. Although the agreement included language purporting to set the price at the same price [Sorensen paid] to the FHA, that price is elusive. ¶9 Sorensen purchased the property from the FHA, which set the purchase price after reviewing Johnson's appraisal. The price [Sorensen paid] to the FHA was not required to be the value set by the appraisal, but the FHA apparently agreed with Johnson's conclusion and set the price at $355,000. The appraisal report contained assessments of the property's value utilizing the cost, income, and sales comparison approaches. Although the appraisal contained itemized values for portions of the property of differing character, these values are of no assistance in determining what price Sorensen paid for discrete portions of the property, including the water shares. ¶10 The application of the cost, income, and sales comparison approaches to valuation resulted in three different conclusions regarding the value of the property. Under the cost approach, Johnson valued the property at $369,300, while the income approach yielded a value of $319,000, and the sales comparison approach resulted in a value of $358,000. Johnson adopted none of these three methods, instead valuing the property at $355,000. Johnson's ultimate conclusion that the value of the property was $355,000 is unaccompanied by any itemized list of values for discrete portions of the property or any explanation of his methodology. Given that none of the approaches was adopted, it follows that the itemized values found in Johnson's evaluation of each of those approaches are of no utility in determining the value of the water shares, or any other fraction of Sorensen's purchase. ¶11 Ignoring the itemized values in Johnson's appraisal, as we must, what is left is the sole fact that Sorensen paid $355,000 for the entire property. There exists no mechanism for determining what price Sorensen paid for any fraction of the property. The trial court faced this problem and, despite hearing all the evidence on the matter, ultimately concluded that it could not determine a price. We agree with the trial court that the price of the water shares is not ascertainable. The legal consequence of a missing price term is the unenforceability of the agreement. Id. at ¶¶ 11-12. Accordingly, although the trial court's disposal of the case appears to be premised on Carter's failure to exercise the option, the absence of a price term is the basis for our decision to affirm the trial court. See, e.g., State v. Topanotes, 2003 UT 30, ¶ 9, 76 P.3d 1159.