Plaintiff buyer challenged the judgment of the Superior Court of Los Angeles County (California) in buyer’s favor in the amount of one dollar as damages for defendant seller’s breach of a contract resulting from buyer’s exercise of an option to purchase property.

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Overview

The buyer entered into an option to purchase property from the seller. When buyer elected to exercise the option, seller refused because his wife had declared a homestead on the property. The trial court refused to award buyer specific performance or damages for breach. The court reversed, finding that the option was not unfair because it did not give buyer a right to indefinite postponement of performance where he was bound to purchase the property upon seller’s furnishing him with title. The court held that the adequacy of consideration for the option was not material because buyer did not seek to enforce the option, but rather the contract that resulted from his exercise of the option. The court determined that buyer was entitled to specific enforcement because the declaration of homestead made by seller’s wife with knowledge of his contract with buyer was subject to buyer’s right to demand conveyance under the contract. Because the decree was not binding on third parties, the court ordered a new trial in which every party having an interest in the property was represented to determine the relative rights of buyer and an alleged subsequent purchaser for value.

Outcome

The judgment awarding buyer one dollar as damages for seller’s breach of a contract resulting from buyer’s exercise of an option to purchase property was reversed, and a new trial was ordered.