Crabby v. Hamilton (Contracts)
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Uploaded by JonathanOravic
(How Damages are measured in real estate contracts)
Crabby’s Inc. v. Hamilton (2008)
Missouri Court of Appeals
Facts: Crabby’s Inc. owned and operated Crabby’s restaurant. In 2003, the company listed the restaurant and its real property for sale. Hamilton offered to buy it for $290k, which Crabby’s accepted on May 17
th
. The Purchase agreement included a financing contingency, which gave Hamilton 30 days to obtain a bank load and provide a loan commitment to Crabby’s. If Hamilton failed to do this, the agreement automatically terminated. The purchase
agreement also set a closing date (June 30, 2003). The parties then prepared for closing. Crabby’s took care of outstanding tax liens and made certain repairs, while Hamilton obtained a loan offer – but never provided Crabby’s
a copy of the loan commitment. Hamilton also applied for the licenses necessary to run a restaurant. On June 17
th
and July 17
th
, the parties executed amendments to the purchase agreement, extending the closing date. They also executed a ‘rider,’ giving Hamilton possession of the property starting July 21
st
to begin cleaning. Closing was scheduled for Aug. 1
st
– but on July 30
th
, Hamilton announced he was backing out, and didn’t appear for the scheduled closing. Shortly after, Hamilton bought a different property and set up shop there. A year later, Crabby’s sold the restaurant and property for $235k – then sued Hamilton for breach of K, seeking the difference between their K price and the price Crabby’s obtained when it sold the property a year later + costs accruing after Hamilton’s breach. Proc. Hist.
Hamilton argued that the agreement terminated 30 days after it was executed when Hamilton failed to provide Crabby’s a copy of the loan commitment – so no breach. Trial Ct. awarded Crabby’s $95k
. Hamilton appealed.
Issue:
Are a seller’s damages for breach of a real estate sales agreement the difference b/t the K price and the property’s fair market value (on the date of the breach)?
Hold/Reason:
Yes.
A seller’s damages for breach of a real estate sales agreement is the diff. b/t the K price and the property’s
fair market value on the date of the breach.
Financing Contingency (protects the buyer):
o
A party can waive a condition by a clear, unequivocal, and decisive act demonstrating an intentional relinquishment of the contingency’s benefit.
Here, Hamilton executed 3 amendments
after the purchase agreement supposedly terminated.
o
These amendments and Hamilton’s other actions,
including taking possession of the premises constituted Hamilton’s clear, unequivocal and decisive waiver of the agreements financing condition
So
, the agreement did not terminate
.
Damages
o
Fair market value = price that a property will bring when offered for sale by an owner who is willing, but not compelled to sell, and bought by a buyer who’s willing but not compelled to buy.
(strong desire/motivation does not equal compulsion.)
Even if Crabby’s was motivated to sell the restaurant – it wasn’t compelled to
o
The price Crabby’s obtained when it sold the property was valid evidence of the property’s value,
at the time the sale should have closed. (Affirmed)
(How Damages are measured in real estate contracts)
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