April 26, 2010

Court reviews whether construction company was relieved of its contractual obligation due to a material breach as a result of prospective buyers' failure to pay

COREY GERULIS AND WIFE SARA FELMLEE v. DANIEL A. JACOBUS, ET AL. (Tenn. Ct. App. April 26, 2010)

Prospective buyers entered into a contract with construction company for purchase of a home; the contract was amended to provide that a garage would be constructed. A letter was subsequently prepared specifying a time for the buyers to tender payment for the garage. The buyers failed to secure a loan to finance construction of the garage until a year after closing. When the construction company refused to build the garage for the amount specified in the contract amendment, the buyers initiated this action.

The trial court found that the letter clarified the amendment by setting a time for performance and that the buyers' failure to pay within that time was a breach of the agreement which relieved the construction company of its contractual obligations; the court consequently dismissed buyers' action. Finding that there was not an agreement between the parties, the trial court's determination that the letter clarified the amendment is reversed. Finding that a reasonable time for performance was 90 days from closing on the home, and that the buyers' failure to tender payment within such period was a material breach, we affirm the trial court's determination that the construction company was relieved of its contractual obligations.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2010/gerulisc_042610.pdf