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MMLU / The President and sole stockholder of a small business negotiated to sell the…

Problem

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question

The President and sole stockholder of a small business negotiated to sell the business to an individual investor. The parties met and signed a "Letter Agreement", which set forth the price, down payment amount, financing terms, the assets to be included, and a host of other pertinent details. The final closing date was not stated, but the purchasers left a down payment of $20,000 with the seller. The letter stated that the terms comprised their essential agreement, but that a formal document would be drafted by the parties' attorneys. Before that happened, the seller returned the check and refused to perform. The investor brought an equity action for specific performance to compel the sale. The equity court ruled that there was a complete and binding contract that must be specifically performed. Will the appellate court likely affirm the lower court's decision?

choices

  1. No, because closing date was left out and the attorneys were supposed to compose the final contract with all of the remaining details put in.
  2. No, because this type of letter is basically a "gentlemen's agreement" that is not intended to be legally binding.
  3. Yes, because a letter of intent is legally binding if it sets forth the price, describes the business and is signed by both parties.
  4. Yes, because where the letter contains all of the essential terms required for a contract, it will be enforced as a contract.

subject

professional_law

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Source and history

task_id
e2ce802c-1946-57e6-b362-3881b943a236
task_key
all--test--e2ce802c-1946-57e6-b362-3881b943a236
task_revision_id
1
config / split
all / test

Official source

initial import