(2008-05-09) Nevada Corporation
The disappointed party that had made the first offer sued the owners to enforce what it regarded as a completed contract for the sale of the license and fixtures.
When the owners of a party store
received an offer to purchase not the
entire property, but only their liquor
license and fixtures, they accepted the
offer, but on the condition that their
attorney approve the deal. Before the
attorney’s review of the first offer, the
owners received a better offer from
another potential buyer, this time for
the entire property, including the license,
the fixtures, the real property,
and the business itself.
The second offer was for about five
times as much money as the first offer.
The owners also accepted this offer,
but again conditioned acceptance on
approval by their attorney. The owners’
attorney then reviewed both offers
at the same time and, not surprisingly,
approved the second, more favorable
one.
The disappointed party that had
made the first offer sued the owners to
enforce what it regarded as a completed
contract for the sale of the license
and fixtures. It contended that
the sellers had waived the requirement
of attorney approval by their bad faith
in simultaneously submitting to the attorney
two competing purchase agreements,
both of which conditioned acceptance
on approval by the attorney.
The disappointed party further argued
that, by procuring the second offer and
prospective agreement, the sellers had
wrongly hindered the fulfillment of the
only condition remaining to be fulfilled
on the first agreement—attorney
approval.
A court disagreed that there was
any bad faith and upheld the contract
formed when the second offer was accepted
and approved by the sellers’
attorney. While the plaintiff had been
the first to make an offer of any kind,
nothing in its potential contract prohibited
the sellers from considering other
offers. Nor were the sellers obliged to
take the property off the market pending
review of the first offer by legal
counsel. Consideration and eventual
full acceptance of the second offer was
not legally impermissible where the
first offer had been only conditionally
accepted.
There was no limit on what aspects
of the first agreement were subject to
the attorney’s approval. He was free to
disapprove it, as he did, simply because
there had been a better competing
offer made by a competing prospective
buyer. Moreover, the sellers
had not interfered with their attorney’s
actions, such as by instructing him to
disapprove the first offer. In short, the
sellers had not acted in bad faith. They
were guilty of nothing more than
shrewd business moves during what
the court described as a period of
“dickering” that preceded the formation
of an enforceable contract.
Resident Agents of Nevada, Inc.
(775) 882-4641
www.nevada.org