When is a contract not a contract? It's in the details.

The Massachusetts Supreme Judicial Court recently held, in McCarthy v. Young et al, No. 23-P-1124, that an offer to purchase, despite being signed by all parties and including language stating it was “a legal document that creates binding obligations,” was undone because there were materials terms that had not been included in the contract.

The facts of the case were undisputed: the buyer tendered an offer to buy a property in Charlestown for $850,000.00. The sellers forwarded the offer to their attorney and one seller signed shortly thereafter. Before the second seller signed, the seller’s attorney told the seller and their broker to reserve a maintenance easement across the property. The seller’s broker relayed this to buyer’s broker and that the purchase and sale agreement would cover this more fully. Negotiations over the easement continued past the purchase and sale deadline in the offer, and eventually the sellers stated the deal was off.

In its decision, the SJC stated that in order for a contract to be enforceable, it must both contain the material terms of the agreement and evince a present intention to be bound. An offer to purchase property is unique in that it normally contemplates a further purchase and sale agreement. However, it can be enforceable if it contains all material terms but a failure on this front “‘may prevent any rights or obligations from arising on either side for lack of a completed contract.’”

In this case, the offer’s failure to set out the exact terms of the easement rendered it unenforceable. There was an “implied understanding” that the easement parameters would be worked out, but that is merely an “aspiration.” Hence, no enforceable contract.

The full text of the decision can be found here.