Carpenter v. Williams
428 So.2d 1314 (1983)
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Rule of Law:
Under Louisiana law, a contract is rendered unenforceable for failure of cause when the principal motive for one party entering the agreement ceases to exist, provided the other party was aware that this motive was the principal cause for the agreement.
Facts:
- Donald Lee Williams, an employee of Transco, lived in Lafayette, Louisiana and commuted 110 miles each way to his job in Cameron.
- In September 1979, Williams' employer, Transco, ordered him to relocate closer to Cameron.
- To comply with the order, Williams began searching for a house in Lake Charles and met with James R. Carpenter, a builder.
- Williams informed Carpenter that the sole reason for his move and potential home purchase was the transfer order from his employer.
- On September 28, 1979, Williams signed an offer to purchase a house from Carpenter, which included a contingency that the sale of Williams' Lafayette home must close.
- Williams initiated the process to have Transco purchase his Lafayette home, per company policy for relocated employees.
- After Williams secured a loan for the new house, Transco rescinded the transfer order, informing Williams he no longer had to move.
- Upon learning he no longer had to relocate, Williams declined Transco's offer to buy his Lafayette home and notified Carpenter he would not be purchasing the Lake Charles house.
Procedural Posture:
- James R. Carpenter sued Donald Lee Williams and his wife in a Louisiana trial court for specific performance of a real estate buy-sell agreement.
- The Williamses filed a reconventional demand (counterclaim) seeking the return of their deposit.
- The trial court dismissed Carpenter's claim for specific performance and awarded the Williamses the return of their deposit.
- Carpenter, as the appellant, appealed the trial court's judgment to the Court of Appeal of Louisiana, Third Circuit, where the Williamses are the appellees.
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Issue:
Does the rescission of an employer's transfer order, which was the known principal cause for a buyer to enter into a real estate purchase agreement, invalidate the agreement due to a failure of cause?
Opinions:
Majority - Cutrer, J.
Yes. The buy-sell agreement is unenforceable because the principal cause for the contract ceased to exist. An error in the principal cause, or motive, can invalidate a contract if the other party was aware that it was the consideration without which the contract would not have been made. Here, Williams' only reason for entering the agreement was to comply with his employer's transfer order, a fact of which Carpenter was aware. When the employer rescinded the order, the cause for the contract failed, rendering the agreement unenforceable. This principle is consistent with prior Louisiana cases where contracts were rescinded because an essential assumed condition, such as the ability to obtain a liquor license or a specific zoning classification, did not exist or failed to materialize.
Analysis:
This case provides a significant application of the Louisiana civil law doctrine of 'cause' to invalidate a real estate contract based on the failure of a subjective, yet communicated, motive. The decision establishes that a party's external circumstances, if known to be the sole reason for the contract, can become a legally operative condition. This precedent expands the concept of failure of cause beyond errors about existing facts to include the subsequent failure of an anticipated condition. It underscores that courts may look beyond a contract's written terms to assess its enforceability if the foundational motive, known to both parties, disappears.
