Question

Jack has a restaurant in downtown Rochester, New York. He decided to expand his restaurant business to the University of Rochester neighborhood. Jack contacted Cindy, who owns a building on Mt. Hope Ave., Rochester, New York. Mt. Hope Ave. is populated with businesses that service University of Rochester students. Jack offered to buy the building. Cindy had bought the building with her husband Mike thirty years earlier, as tenants by the entirety. Cindy used the building as a health food store. Cindy and Mike do not live together. It is not clear if Cindy and Mike are divorced or if Mike transferred his interest in the building to Cindy. Mike lives in Aruba, where he has an investment consulting business. Cindy was anxious to sell the building quickly because she heard a rumor that a potentially noisy bar (“Nasty’s”) was slated to move in next door. After brief negotiations, Jack and Cindy executed a purchase and sale contract for Jack to purchase the building for $750,000. There were no contingencies in the purchase and sale contract.

Prior to the scheduled date of the closing, Jack learned the following:

(1) There is no access to the rear delivery entrance of the building other than over an alley owned by the neighboring building, which had been used by Cindy for 30 years;

(2) Nasty’s was opening in one month and in its previous location, Nasty’s had been frequently cited for noise ordinance violations;

(3) Cindy removed all the plumbing in the building;

(4) The building is not designated by the City of Rochester for commercial use as a restaurant and violates the deed.

Jack refused to buy the building. Cindy files a lawsuit against Jack. What will Cindy argue? What will Jack argue? How will the court rule on this case? Provide justification for your decision.

Answer 1

Cindy and Jack have already signed the contract of sale where Jack has agreed to pay Cindy $750,000. After the signing of the contract, Jack has now backtracked from his commitment. Although his point of view in backtracking could be justifiable, let us see how the arguments from both Cindy and Jack may turn out in the Court of Law .

Cindy has a stronger case , from her point of view , since the Contract is already signed. From a pure legal point of view, already signing of the contract may be a big push against Jack in the verdict. Cindy would argue that if Jack would not want to buy the building, Jack should have backtracked earlier and not signed the agreement or the contract. Jack had enough time to enquire about the building and take his decision. Cindy has not lied to Jack about any fact of the building and Jack was informed in detail about the property. Cindy could argue that , if now, after the signing of the contract , the contract is laid invalid by the Court of Law, or in other words, if Jack is allowed to get away with his decision of backtracking from this contract, this would directly bring a bad fame to her property or building. The nearby people would not want to buy or invest in this property again, as they might fear of any kind of issues in this property. Cindy’s primary argument would be that, whatever Jack had to do or backtrack, should have been done before he signed the contract.

Jack will put forward his arguments with the base of his ground being the fact that , although Cindy would not have lied to her about the building , but Cindy has not revealed may things about the building on purpose. Jack would argue that , Cindy seemed very anxious to sell off the building, and had hidden a lot of negative points about her building, like the non-existence of any rear entrance to the building, which is of prime importance to his plan of a business establishment. Moreover, all the plumbing was removed from the house, which was not informed to him earlier, further more , the strongest point which may go in favor of Jack would be that Cindy’s building is not recognized by the City of Rochester for any commercial use, and this fact was hidden by Cindy before the contract signing. Therefore , on the ground of misinterpretation of facts, Jack hold a big edge over Cindy in the verdict in favor of him.

The Court of Law, after examining both sides of the story , will definitely make it clear to Jack that , all the necessary checks about the building should have been done by him , before signing the contract. A contract is a legal binding whereby we agree to terms and conditions. After signing the contract , backtracking should not be allowed. However, keeping note of the point of view of Jack , the Court will also clearly state to Cindy that she is too at fault , by hiding all proper information about her building to the buyer. Therefore, the Court may finally go in favor of a mutual understanding , where by either Jack will have to agree to the contract and buy the building , but at a significantly lower cost, for example around $300,000 in lieu of the difficulties he would have to face after he buys the premises to get the building recognized from the City of Rochester for Commercial use, getting the plumbing fixed in the building and arranging for a proper and safe rear exit. The other option would be , Jack be allowed to backtrack from the contract , but will have to pay Cindy a certain amount of money, for example around $150,000 in lieu of her difficulties that she would now fact in any future negotiation with her new buyers, or if the building stays unsold fore over. Both Jack and Cindy could mutually decide as to which option they would prefer to agree with.