Moreland Development Co. v. Gladstone Holmes, Inc.

California Court of Appeal Sep 20, 1982 No. Civ. No. 62353Published

Before: Aisenson

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Holding. The court held that the trial court erred in granting summary judgment because the contract contained triable issues of fact regarding whether a bilateral contract was formed and whether the buyer's acceptance preceded the seller's revocation.

Issues

Whether a contract conditioned on board approval and other contingencies is illusory or lacks mutuality of obligation.
Whether there are triable issues of fact regarding the timing of contract acceptance versus revocation.

Disposition. reversed

Quotations verified verbatim against the opinion

“the condition of board approval does not give respondent corporation the absolute right to escape its obligations under the agreement since there is an implied obligation on the part of the seller’s officers to carry out the objectives”

“we cannot say, as a matter of law, a bilateral contract was not struck or that the sellers’ revocation preceded buyer’s acceptance.”

[975]Opinion

AISENSON, J.* After several months of negotiations on March 6, 1979, respondent/seller executed a writing entitled, “Superseding Agreement to Buy and Sell Real Property and Escrow Instructions” regarding 75 acres of industrial land located in the City of Pomona at a purchase price of $2.9 million. The document was signed as “Seller” by the president and secretary of respondent company and the corporate seal was affixed thereto.

On March 9, 1979, appellant’s president and assistant secretary signed as “Buyer” and its corporate seal was affixed thereto. Appellant is a wholly owned subsidiary of Union Oil Company.

Among the pertinent provisions contained in the document under the designation “4. Conditions Precedent” Buyer’s obligation to purchase and close of escrow are conditioned on the following;

(b) Buyer to obtain a satisfactory tract map. “All of the features of said maps and conditions imposed by the approving authority shall be satisfactory to Buyer in Buyer’s sole discretion.... ”

(3) (Should be (e).) Buyer obtaining at its own expense, satisfactory engineering, soil and geology reports for the property. “If Buyer does .not decide to proceed, in return for Seller providing Buyer the right to investigate the property for 60 days and approve the condition of the property prior to proceeding with the purchase, Buyer shall, in the event of cancellation of this Agreement without a close of escrow and transfer of title to Buyer, assign to Seller (without warranty of accuracy, reliability or thoroughness thereof)” and deliver all said documents to seller at no cost to seller and “Buyer hereby agrees to indemnify and hold Seller harmless against any damage or claims arising from Buyer’s activities during said investigation.”

(f) A preliminary title report acceptable to “Buyer ...”

“(i) Executive Approval [The main point of contention among the provisions of the document] Buyer’s obligations to purchase and close of escrow are conditioned upon the approval of the transaction de[976]

Moreland Development Co. v. Gladstone Holmes, Inc.

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