– Trial court stated that the contract was “illusory” and lacked “mutuality” from both sides.
– Mattei was a real estate developer looking to purchase land for a mall…After going back and forth, defendant put an offer in, and plaintiff accepted the same day
– Gave initial $1,000 of the $57,500…..and was given 120 days to “examine the title and consummate the purchase”…This was a written agreement…
– At end of 120 days, and the plaintiff found it to be satisfactory, the defendant would have to sell the land…It was specific “satisfactory” clause set up.
– Before 120 days were up, defendant’s attorney told P that the defendant would not sell her land under the terms contained in the deposit receipt.
– Satisfactory leases had been obtained, and the P, offered to pay the balance of the transaction.
– D claimed that the deposit receipt was NO MORE than an offer to him.
– It is in the hands of the plaintiff- it is his duty to see if it is “satisfactory”, it is dependent upon this! Thus, a contract arose!!!…these are binding contracts…
– Without a jury, the trial court was in favor of defendant.
– Appealed to Supreme Court of California.
– Ultimately reversed in favor of plaintiff.
– Is a promise of “satisfaction” based upon good faith with mutual obligation one that is deemed a contract and is enforceable by law?
– If satisfactory clauses, are made in good faith, and are part of a contract, and are done correctly, they are enforceable by law. His dis-satisfaction must be genuine and be in good faith, which it was here…If done in good faith; it is an ADEQUATE performance to constitute a consideration.
– When parties attempt, as here, to make a contract where promises are exchanged as the consideration, the promises MUST be mutual in obligation…..Assumed some legal obligation on both sides.
– Commercial value or quality, operative fitness or mechanical these cannot be claimed arbitrarily, unreasonably or capriciously….and the standard of a reasonable person.
– Judgment reversed in accordance with good faith, in favor of plaintiff.
– When held in GOOD FAITH, can be a defense of the promisor of the satisfaction clause.