Beall v. Beall
413 A.2d 1365, 45 Md. App. 489 (1980)
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Rule of Law:
An option contract that is not supported by consideration is not an irrevocable binding agreement, but rather functions as a mere offer to sell, which becomes an enforceable contract if it is accepted by the optionee before it is revoked by the optionor.
Facts:
- In 1968, Carlton G. Beall purchased a farm and allowed his cousin, Calvin Beall, and Calvin's wife, Cecelia M. Beall, to continue farming it in exchange for paying property taxes.
- Calvin and Cecelia Beall owned a one-half acre parcel of land adjacent to the farm.
- In 1968, Carlton paid Calvin and Cecelia $100 for a three-year option to purchase their parcel for $28,000.
- In 1971, the parties executed a new five-year option on the same terms, for which Carlton paid an additional $100 in consideration.
- On October 6, 1975, before the 1971 option expired, Calvin and Cecelia signed a handwritten extension of the option for three more years, until February 1, 1979; no new consideration was recited or paid for this extension.
- In August 1977, Calvin Beall died, making Cecelia the sole owner of the property.
- In May and September of 1978, Carlton notified Cecelia in writing that he was exercising the option to purchase the property.
- Carlton was prepared to close the sale on October 5, 1978, but Cecelia refused to attend the settlement and convey the property.
Procedural Posture:
- Carlton G. Beall sued Cecelia M. Beall in the Circuit Court for Prince George’s County (a state trial court), seeking specific performance of the option agreement.
- At the close of the plaintiff's case at trial, the defendant moved to dismiss the complaint.
- The trial court chancellor granted the motion to dismiss, finding the 1975 extension was unenforceable for lack of consideration.
- The plaintiff, Carlton G. Beall, as appellant, appealed the dismissal to this Court (an intermediate appellate court); Cecelia M. Beall is the appellee.
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Issue:
Does the lack of consideration for an extension of an option to purchase land render the agreement unenforceable, even if the option holder accepts the offer before it has been revoked?
Opinions:
Majority - Moore, J.
No. The lack of consideration for an extension of an option does not render it unenforceable if accepted before revocation; rather, it transforms the irrevocable option into a revocable offer. An option requires consideration to make it an irrevocable promise to keep an offer open for a specified time. When consideration for an option fails or is absent, as was alleged here for the 1975 extension, the option is no longer irrevocable. However, it does not become void; it simply becomes a standard offer to sell that can be withdrawn by the optionor at any time before acceptance. If the optionee accepts this revocable offer before the optionor has withdrawn it, a binding contract is formed, supported by the mutual promises of the parties. The trial court erred by dismissing the case solely on the grounds of lack of consideration for the extension, without determining whether a revocable offer existed and whether it had been accepted before any revocation occurred.
Analysis:
This decision clarifies the legal status of an option agreement unsupported by consideration. It establishes that such an agreement is not void but instead operates as a revocable offer. This shifts the legal inquiry from merely finding consideration for the option itself to a two-part analysis: first, was the offer revoked, and second, was it accepted before revocation? This precedent ensures that parties cannot escape a contract simply because the initial option period lacked consideration, provided the underlying offer was accepted while it was still open, thereby protecting the reasonable expectations of the accepting party.
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