Confused7 wrote: Confused7 wrote:
Do some NY multiple choice questions just not contain any NY specific law? For example, I just came across this one and couldn't figure out the NY distinction for the life of me. The answer explanation does not go into NY law at all but seems to describe only MBE law.
- [+] Spoiler
- Defendants owned shares in a cooperative apartment in Manhattan. They entered into a three-year sublease agreement with Plaintiff. The sublease included an option to purchase the apartment for $600,000, conditional upon approval of the cooperative board. Toward the end of the third year, Plaintiff notified Defendants that he was exercising his option. Thereafter, the parties executed a contract of sale, which included an anti-assignment provision, a standard merger clause, and a reiteration that the right to purchase was subject to approval by the cooperative board. After execution of the contract, the cooperative board rejected Plaintiff's application. Pursuant to the terms of the contract of sale, the denial automatically canceled the contract but entitled Plaintiff to remain in the apartment through the term of his original sublease. Plaintiff then attempted to present a second candidate for purchase of the apartment, claiming he had a right to assign his option to purchase the apartment pursuant to the sublease. Defendants countered that the option was no longer available after the board's refusal to approve the contract. Plaintiff commenced an action for specific performance.
How should the court rule?
A) For Plaintiff, because the option clause within the sublease agreement was freely assignable.
B) For Defendant, because the non-assignment clause within the contract of sale extended to the option to purchase.
C) For Plaintiff, because the option clause remained enforceable throughout the term of the sublease.
D) For Defendant, because after Plaintiff attempted to exercise the option contract, the sublease merged, and the terms were no longer enforceable.
The correct answer was D based on the parol evidence rule. Are there any distinctions to the PER that I'm missing?
Okay, sorry to bump, but I have another question on a different NY multiple choice question. They are driving me crazy!
- [+] Spoiler
- Buyer entered into a contract to purchase property from Seller. The contract required a down payment of 10 percent to be made by check, subject to collection. The balance of the purchase price was to be paid at closing. Buyer signed the contract and delivered it, together with her personal check in the amount of the required down payment. The next day, however, she stopped payment on the check. The day after that, Seller, without knowing that payment of the check had been stopped, signed the contract as Seller and mailed it back to Buyer's attorney. Seller thereafter sold the property at a higher price, but nevertheless commenced a lawsuit to recover the full amount of the down payment, claiming that Buyer breached the contract. Buyer claimed that the contract never took effect, and even if it had, Seller suffered no recoverable damages. How should a court rule?
A) For Buyer because payment on the check was a condition precedent that failed, and mere delivery of the check was insufficient.
B) For Buyer because payment on the check was stopped prior to Seller signing the contract and therefore constituted a revocation of offer prior to acceptance.
C) For Seller because in a real-property contract, delivery of the check by Buyer constitutes a valid down payment.
D) For Seller, with a limit of nominal damages absent a showing of actual harm.
The correct answer is C. Where the heck is this rule statement? I checked both the NY Contracts and Property outlines and couldn't find anything. For the record, I wrongly chose B.
the check being good was not a condition for the contract being enforceable; the signatures made the contract enforceable. The down payment is a liquidated damages clause- just because the check was canceled, doesn't mean the contract was not enforceable. The seller could have brought an action to demand specific performance. Since they sold the house already, that's not available. that means the seller could have brought a suit for damages resulting from the breach (i.e. if the house sold for less than the breached contract price)
the sections below are excerpts from the ny distinction real prop.... answer choice D is correct because although the seller would sue for the 10 percent, he would only get nominal damages since he sold the house for more than the original K (i.e. expenses of entering into another k)
New York Point of Law: Liquidated Damages
New York courts have permitted a non-breaching seller of real property to retain a 10 percent down payment as liquidated damages in the event a buyer refuses to go forward with a sale. See, e.g., Olcott Lakeside Dev., Inc. v. Krueger, 616 N.Y.S.2d 841 (App. Div. 1994).
also- ** 3. Remedies for Breach a. Damages
Both the buyer and the seller can recover damages based on the difference between the contract price and the market value on the date of performance. If the seller breached but acted in good faith, then damages are limited to the buyer’s out-of-pocket expenses.
A non-breaching seller may also collect liquidated money damages for costs relating to reselling the property, but courts likely will not enforce liquidated damage clauses if the seller suffered no loss (such as if the value of the property actually increased).