Court Opinion

ID: 7840967
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:00:33.969109+00
Date Added: 2024-06-11T16:03:13.703197
License: Public Domain

Shea, J.,
concurring. I disagree with the conclusion of the majority that the agreement between the parties, despite its title, “Option Agreement,” and the inclusion of provisions expressly discharging the plaintiff of liability in the event of its failure to purchase the property, imposed “a binding obligation upon the plaintiff to purchase the property.” Paragraph 16 of the written contract is as follows: “In the event Purchaser, through no fault of Seller, fails to perform any of the obligations hereinbefore set forth, Purchaser shall forfeit all claims to the Premises described herein, and all deposits previously paid in pursuance of this Agreement prior to said default by the Purchaser shall be construed as full liquidated damages to Seller and Purchaser shall be discharged of any and all liability to Seller under this Agreement. The parties agree that such deposits that have been previously paid to the Seller shall be considered as full liquidated damages by reason of the fact that the parties will be unable to agree on actual damages suffered by the Seller by removal of the Premises from the sales market.” In contrast, paragraph 17 provides that, upon default of the seller, “Purchaser may at its option: (a) enforce the terms hereof by action for specific performance; or (b) terminate this Agreement in which event all deposits and any and all interest thereon tendered by Purchaser to Seller shall be released and returned to Purchaser.”
The majority concedes that “a distinguishing feature of an option contract is that it imposes no binding obligation on the option holder to complete the purchase.” Because the “Option Agreement” provided for forfeiture as “full liquidated damages” of the deposits made by the plaintiff as the purchaser upon its failure to complete the purchase of the property and, in such event, discharged it from “all liability” under the agreement, no obligation to purchase has been imposed on the plaintiff beyond forfeiture of the deposits. In the same way *117no obligation is imposed on the holder of a standard option to purchase property beyond loss of the price paid for the option. Therefore, I would follow the cases that have treated agreements like the one before us, which incorporate an option provision into a contract of sale in the form of a provision releasing the buyer from liability for failure to perform but forfeiting the deposit as liquidated damages, as having essentially the same legal consequences as an option contract. Dodek v. CF 16 Corporation, 537 A.2d 1086, 1094 (D.C. App. 1988); Green Manor Corporation v. Tomares, 266 Md. 472, 295 A.2d 212 (1972); Dixon v. Haft, 253 Md. 692, 696, 253 A.2d 715 (1969); Broady v. Mitchell, 572 S.W.2d 36, 40 (Tex. Civ. App. 1978).
I agree with the result, nevertheless, because the alternative ground relied upon by the trial court, that the plaintiff did effectively exercise its option to purchase within the time contemplated is adequately supported by the evidence. There was evidence that the parties were negotiating over modifications of the terms of their agreement and that the defendants made a counterproposal on the date originally scheduled for performance concerning an extension of the time of performance. These negotiations, as the court found, “belie any claim on the part of the seller that time was of the essence” while the parties were attempting to agree upon a modification of the “Option Agreement.”