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Second Department Holds That Material Term of Contract For Sale of Real Property (i.e., the Property Description) Was Too Indefinite To Enforce

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  • Posted on: Dec 29 2023

By Jonathan H. Freiberger

This BLOG has written numerous times on issues related to contract formation.  See, e.g., [here], [here], [here], [here] and [here].  Briefly stated, “[t]o create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with all material terms.”  Total Telcom Group Corp. v. Kendal on Hudson, 157 A.D.3d 746, 747 (2nd Dep’t 2018) (Citations and internal quotation marks omitted).  The Court of Appeals, in Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher, 52 N.Y.2d 105 (1981), explained the importance of “definiteness” in a contract’s terms:

[i]t also follows that, before the power of law can be invoked to enforce a promise, it must be sufficiently certain and specific so that what was promised can be ascertained. Otherwise, a court, in intervening, would be imposing its own conception of what the parties should or might have undertaken, rather than confining itself to the implementation of a bargain to which they have mutually committed themselves. Thus, definiteness as to material matters is of the very essence in contract law. Impenetrable vagueness and uncertainty will not do.

Martin Delicatessen, 52 N.Y.2d at 109 (citations omitted).  See also Vizel v. Vitale, 184 A.D.3d 602, 604 (2nd Dep’t 2020).  The definiteness doctrine, however, should not be applied “rigidly” because “[c]ontracting parties are often imprecise in their use of language, which is, after all, fluid and often susceptible to different and equally plausible interpretations.”  166 Mamaroneck Avenue Corp. v. 151 East Post Road Corp., 78 N.Y.2d 88, 91 (1991).  Because a “strict application of the definiteness doctrine could actually defeat the underlying expectations of the contracting parties[,] where it is clear from the language of an agreement that the parties intended to be bound and there exists an objective method for supplying a missing term, the court should endeavor to hold the parties to their bargain.” Id. (citations omitted). 

The Court of Appeals has “identified two ways in which the requirement of definiteness could be satisfied in the absence of an explicit contract term: (1) an agreement could contain a methodology for determining the missing term within the four corners of the lease, for a term so arrived at would have been the end product of agreement between the parties themselves; or (2) an agreement could invite recourse to an objective extrinsic event, condition or standard on which the amount was made to depend.  Id., at 91 -92 (quoting Martin Delicatessen, internal quotation marks, ellipses and brackets omitted).

Moreover, New York General Obligations Law 5-703(2) requires that certain contracts relating to real property be in writing.  As we have previously noted in this BLOG:

The statute of frauds provides that “[a] contract for the . . . the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.”  New York General Obligations Law 5-703(2) “To satisfy the statue of frauds, a memorandum evidencing a contract and subscribed by the party to be charged must designate the parties, identify and describe the subject matter, and state all of the essential terms of a complete agreement.”  Nesbitt v. Penalver, 40 A.D.3d 596, 598 (2d Dept. 2007) (citation and quotation omitted). The memorandum may be informal – it can be a series of emails – and therefore in compliance with the statute of frauds “where it identifies the parties, [and] describes the subject property, [and] recites all essential terms of a complete [real estate] agreement.”  O’Brien v. West, 199 A.D.2d 369, 370 (2d Dept. 1993). “If the contract does not contain all the necessary terms, the law presumes that the parties have not reached an agreement as to such terms and, therefore the agreement is fatally flawed and unenforceable.” 3-32 Warren’s Weed New York Property § 32.10.  In that instance, or if “it is necessary to resort to parol evidence to ascertain what was agreed to, the remedy of specific performance is not available.” Nesbitt, 40 A.D.3d at 598 (citation and internal quotation marks omitted).

These general principles are addressed in Duffy v. Leteri, decided by the Appellate Division, Second Department, on December 20, 2023.  Duffy was an action in which the plaintiff/seller sought a declaration from the court that its contract for the sale of real property was unenforceable.  The relevant facts are summarized herein.  [Eds. Note: some of the facts recited herein were obtained from a review of the underlying file available on the court’s NYSCEF system.]  The parties in Duffy entered into two contracts for the sale of real property.  According to the motion court’s decision:

The first contract involved land on [a certain] tax map … (Approximately 4.20 acres) which comprises the entirety of lot 7 of the property. The contract states that it was conveying 4.20 acres of vacant land. The second contract indicates the [same] tax map … with a handwritten additions [sic] of “p/o 006.000”. In parenthesis, “Approximately 4.20 acres” has been crossed out and changed to “Approximately 4.71 acres”. The addition of “p/o 006.000” refers to “part of Lot 6,” which lot is 7.20 acres. The second contract still stated that the property being conveyed consisted of 4.20 acre [sic]. The defendant, in his statement of fact, states that there was only one contract. The defendant claims that there was a mistake in the contract that refers to 4.20 acre [sic]. Furthermore, he remembers distinctly which .50 acre P/O lot #6 was included in the contract.  [Footnote omitted.]

The plaintiff, seller, commenced an action seeking, inter alia, a declaration that the contracts are unenforceable.  The defendant, purchaser, counterclaimed for, inter alia, specific performance.  The plaintiff moved for summary judgment arguing, inter alia, that the subject contract is unenforceable because it contains indefinite terms.  The defendant cross-moved for summary judgment enforcing the contract.  [Eds. Note: this BLOG has addressed specific performance of real estate contracts [here], [here], [here], [here], [here] and [here].  The motion court granted the motion of plaintiff/seller and denied the cross-motion of defendant/purchaser, finding that the property description was not certain.

The Second Department affirmed and, in so doing, stated:

Where a contract’s material terms are not reasonably definite, the contract is unenforceable. To be enforceable, a contract for the sale of real property must be evidenced by a writing sufficient to satisfy the statute of frauds. The statute of frauds provides that “[a] contract for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.” (General Obligations Law § 5-703[2]).

To satisfy the statute of frauds, a memorandum, subscribed by the party to be charged, must designate the parties, identify and describe the subject matter, and state all the essential terms of a complete agreement. The writing must set forth the entire contract with reasonable certainty so that the substance thereof appears from the writing alone.

Parol evidence—evidence outside the four corners of the document—is admissible only if a court finds an ambiguity in the contract. Whether or not a writing is ambiguous is a question of law to be resolved by the courts. The description of real property in a contract of sale need not be as detailed and exact as the description in a deed. Only reasonable certainty, not absolute certainty, as to the terms of the agreement is required. Where the property is described with such definiteness and exactness as will permit it to be identified with reasonable certainty, parol evidence would then be admissible to enable the court to identify precisely the property to which the contract relates.

Here, the plaintiff demonstrated her entitlement to judgment as a matter of law by submitting evidence establishing that the contract lacked a material term. The description of the property was not sufficiently definite and exact to permit the property to be identified with reasonable certainty in satisfaction of the statute of frauds. In opposition, the defendant failed to raise a triable issue of fact. Contrary to the defendant’s contentions, the precise location of the property cannot be ascertained by extrinsic evidence. For the same reasons, the defendant failed to meet his prima facie burden on that branch of his cross-motion which was for summary judgment on his counterclaim for specific performance of the contract.

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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