A. B. C. Auto Parts, Inc. v. Moran

Massachusetts Supreme Judicial Court
268 N.E.2d 844, 359 Mass. 327 (1971)

ELI5:

Rule of Law:

A written memorandum for the sale of real estate satisfies the Statute of Frauds if it states the essential terms of the agreement (parties, property, price), even if it is silent on terms like the closing date or method of payment, as the law will imply reasonable terms.

Facts:

After several months of discussions, the plaintiff corporation, through its president David Kagan, orally agreed on December 7, 1968, to purchase a commercial garage at 227 Prospect Street from Edward Moran for $40,000.
On that day, Kagan gave Moran a corporate check for $3,500 as a deposit.
At Moran's request, Kagan wrote on the back of the check: 'Deposit on property at 227 Prospect St. — Subject to approval of trust. Total price of 40 thousand dollars.'
Moran held the property as a trustee for the Prospect Realty Trust.
On December 16, 1968, Moran endorsed the check and deposited it into the 'Moran Bros.' bank account.
Relying on the agreement, Kagan allowed an option he held on a different property to expire on December 31, 1968, forfeiting $1,200.
On January 31, 1969, Moran sent the plaintiff a letter stating he would sell the property for a new price of $60,000.

Procedural Posture:

The plaintiff corporation filed a bill in equity in the Superior Court (trial court) against the defendant, Edward Moran.
The plaintiff sought specific performance of an alleged oral contract to sell real property.
The trial judge ruled that while the memorandum on the check satisfied the Statute of Frauds, no enforceable agreement had been reached due to a mutual misunderstanding on financing.
The Superior Court entered a final decree denying specific performance and ordering the defendant to return the plaintiff's deposit with interest.
The plaintiff (appellant) appealed the Superior Court's final decree to this court.

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Issue:

Does a written memorandum on the back of a deposit check that identifies the property and total price satisfy the Statute of Frauds and create an enforceable contract for the sale of land, despite being silent on payment terms and despite the parties' conflicting testimony regarding oral financing arrangements?

Opinions:

Majority - Réardon, J.

Yes, the memorandum creates an enforceable contract. A memorandum for the sale of land satisfies the Statute of Frauds if it contains all essential terms, and the law will imply reasonable terms for any elements on which the writing is silent. The endorsement on the check clearly identified the property, the price, and the parties (by implication from the check itself), which are the essential elements of a contract for the sale of land. The memorandum's silence on a closing date is immaterial, as the law implies a reasonable time for performance. Similarly, its silence on payment terms is not a defect, as the law implies an agreement for payment in cash. Since the memorandum was sufficient on its face, the trial court was precluded from finding there was no contract. The conflicting parol evidence regarding financing arrangements is irrelevant because the plaintiff sought to enforce the contract on the terms implied by law (cash payment), not on any extrinsic oral term.

Analysis:

This decision reinforces the principle that the Statute of Frauds requires only the essential terms of a land sale contract to be in writing. The court clarifies that where a memorandum is silent on standard terms, the law will supply them by implication (e.g., cash payment, reasonable time for performance), thus creating an enforceable contract. The ruling limits the ability of a party to use parol evidence of conflicting side negotiations to defeat a contract that is otherwise sufficiently memorialized. This holding provides stability and predictability for informal but written real estate agreements, while cautioning parties that any specific, non-standard terms must be included in the writing to be enforceable.

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