Court Opinion

ID: 9856504
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:49:18.732785+00
Date Added: 2024-06-11T09:38:51.919937
License: Public Domain

LINDE, J.,
specially concurring.
The parties to this business transaction in real estate agreed that if the buyer failed to make payments when due, the seller could, among other remedies, "declare this contract null and void.” The Court now denies enforcement of this agreement on the basis of precedents which declare that when a *783seller has reserved a choice of remedies in the contract, he must give the buyer notice and an opportunity to make the overdue payments before he can effectively end the transaction. I entirely join in Justice Holman’s criticism of that rule. But since I also agree with him that it is the rule stated by the precedents cited by the Court, although they might perhaps be distinguished, I concur in the result in this case.
The Court’s quotation from Epplett v. Empire Inv. Co., Inc., 99 Or 533, 194 P 461, 194 P 700 (1921), shows that it has long been a rule embarrassed for a reason. The quotation states that, "[s]ince contracts like the one here are not self-executing, the law by implication introduces into such contracts a provision” for notice and a reasonable time to pay before "forfeiture” (emphasis added). One might think that after half a century the fiction of "the law” introducing imaginary terms into a contract by implication has become archaic. But the old fiction reflects an ambivalence that has not been resolved: Whether the rule against terminating a contract for lack of timely payment is irrevocably imposed by law or whether it arises from the use of certain conventional contract terms and can be avoided by mutual agreement freshly expressed in other terms. It reflects the tension between the usual freedom of consensual, arm’s-length business agreements and the urge to protect parties against the untoward consequences of such agreements. The question has practical importance and eventually deserves a less equivocal resolution than this decision can provide. The terminology of the present rule obscures rather than explains what may or may not be accomplished by a clearly drafted agreement.
First, the terminology quoted in the Court’s opinion speaks of a difference between "self-executing” provisions and those which, like the provision before us, are not self-executing. The relevance of the distinction to the reason for the rule is not obvious. But the present rule, by its terms, appears to require prior notice to the *784buyer and opportunity to pay when the contract allows the seller "to declare” the contract at an end but not when the contract provides that nonpayment ends the contract by its own force without further notice or declaration by the seller. The distinction invites new "self-executing” contract terms in which the parties agree that the buyer’s failure to pay will terminate his rights without further notice unless the seller at his own option affirmatively waives the delay, with unpredictable results.
Second, the rule is said to apply when the seller has reserved a choice of remedies but not when the contract only provides that he may declare it terminated for nonpayment. The explanation quoted by the majority from Zumstein v. Stockton, 199 Or 633, 264 P2d 455 (1953), purports to derive this distinction from the seller’s obligation to let the buyer know what he chooses to do about the default, but Justice Holman’s dissent in this case shows the fallacy of that explanation. Moreover, even if a clause that gives a party a choice of action logically implies that he will give the defaulting party notice of his choice, it does not explain why he must also give him additional time to cure the default or why the parties cannot expressly agree that the defaulting party disclaims such additional time.
Finally, if the rule represents a judge-made policy against "forfeitures,” as the Chief Justice and Justice Howell, speaking for himself, would prefer, then its present form is an illogical, haphazard, and misleading means to its end. A buyer who cannot meet a payment when he knows that it is due, as this buyer wrote his seller that he could not, still faces a possible forfeiture if he is given notice and an extra few days in which to pay. The requirement at most protects against a failure to make timely payment due to mistake, delay in transmission, or other excusable obstacles consistent with a buyer’s present readiness *785to perform under the contract. That function of requiring notice may well be worthwhile. But the rule does not protect against forfeiture when the buyer does not have the money and cannot raise it.
Nor do our cases inspire confidence that a more rational policy toward contract termination clauses can be developed through case by case litigation spread over several decades under a variety of provisions and transactions. Too many potential variables bear on the choice of policy. Courts do not judicially know enough of the practical effects of sellers’ remedies in changing markets, and decision on the facts of one transaction does not allow systematic consideration of different transactions. Should the rule be the same for commercial real estate transactions negotiated at arm’s length among businessmen as for residential sales, perhaps on a form contract? Should it matter why the buyer defaulted, or how large a proportion of the price he had paid? If he must be allowed time to cure the default, how must notice be given, and how much time?
These are proper questions for legislative determination. If some rights of purchasers are to be placed beyond private agreement, the answers should not depend on a draftsman’s choice between contract clauses nor on such favored judicial adjectives as a "reasonable” time for payment; rules for business transactions should preferably not demand settlement by litigation. I would therefore join Justice Holman’s dissent but for the fact that the established doctrine governs this case.