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Contract Still Enforceable Even Though Signed by Only One Party

In a recent breach of contract case, In re Estate of John E. Mayfield, the Court of Appeals of Tennessee reversed the decision of the trial court which had held that a contract for the sale of a storage facility was unenforceable because there was no mutual assent of the parties.  This opinion is a very helpful reminder to practitioners of how fundamental contract law principles can determine the outcome of a substantial transaction, and of how easy it can be to lose sight of the importance of paying attention to basic contract law principles, as the trial court did.

Here are the key facts:

  • Clayton worked for Mr. Mayfield as a housekeeper and manager of his rental storage facility
  • At some point, she heard Mr. Mayfield say that someone had offered him $1 million for the facility
  • Realizing that Mr. Mayfield might be interested in selling the facility, Ms. Clayton contacted Mr. Saltsman, whom she thought might be interested in purchasing it
  • Saltsman was interested in the facility and wanted to see it
  • The day that Mr. Saltsman was scheduled to visit the facility, Mr. Mayfield could not make it because he had been moved to Alive Hospice, so Ms. Clayton met Mr. Saltsman at the facility
  • The day of the visit to the storage facility, Mr. Saltsman told Ms. Clayton that he would like to buy the property and that he would start with an offer “around” $900,000
  • Clayton did not make an offer of $900,000 to Mr. Mayfield on behalf of Mr. Salstman, but instead, she made an offer on his behalf of $950,000
  • Clayton explained that she made the offer of $950,000, instead of $900,000, because she knew that Mr. Mayfield already, as he had told her, had received an offer of $1 million. So, she decided to make an offer in the middle.
  • When Ms. Clayton informed Mr. Mayfield that Mr. Saltsman would buy the property for $950,000, he said “I’ll take it.”
  • Saltsman testified that, when Ms. Clayton came back to him and told him that Mr. Mayfield was willing to sell the property for $950,000, he said: “Sounds good to me. Send me a contract.”
  • Mayfield asked Ms. Clayton to go to his lawyer’s office to have a contract prepared
  • Clayton testified that, before those instructions, Mr. Mayfield had accepted Mr. Saltsman’s offer
  • Once Ms. Mayfield had the written contract from Mr. Mayfield’s lawyer, she went to Alive Hospice where Mr. Mayfield was
  • Mayfield signed the contract
  • Since Mr. Saltsman was traveling, he told Ms. Clayton to take the signed contract to his house and told her that he would sign it when he returned home
  • After Ms. Clayton dropped off the signed contract at Mr. Saltsman’s house, Mr. Mayfield’s lawyer’s assistant called and told her that it was the “wrong” contract, was “invalid,” and would need to be re-written
  • Clayton informed Mr. Saltsman of the conversation she had had with Mr. Mayfield’s lawyer’s office. Mr. Saltsman said “okay” and that the name of the buyer would need to be changed to another entity than was on the current contract
  • Before a new contract could be drawn up, Mr. Mayfield died
  • Saltsman did not return to town and see the contract Mr. Mayfield had signed until after Mr. Mayfield had died

Mr. Saltsman filed a claim with the estate of Mr. Mayfield. To support the claim, he attached the contract signed by Mr. Mayfield, but it was not signed by Mr. Saltsman. Several months after filing his initial claim, Mr. Saltsman signed the contract and filed an amended claim with a copy of the contract bearing his signature and Mr. Mayfield’s.

Mr. Mayfield’s estate took the position that no enforceable contract existed. The trial court held that no enforceable contract existed because there was no mutual assent.  The trial court held that there was no mutual assent because, first, Ms. Clayton had testified that someone from Mr. Mayfield’s lawyer’s office had told her the contract was not valid and would have to be redrafted. Second, the trial court found that there was no mutual assent because Mr. Saltsman had not signed the contract until seven months after Mr. Mayfield had signed it.

The Court of Appeals reversed the trial court.  It held that, once Mr. Mayfield signed the contract, there was mutual assent. At that point, Mr. Mayfield knew that Mr. Saltsman was offering to buy the property for $950,000, and he accepted that offer by signing the contract and communicating his acceptance to Mr. Saltsman by having the signed contract delivered.  Thus, it was irrelevant that Ms. Clayton had communicated, after that, that the contract was invalid and needed to be re-written.  It was also irrelevant that, after that, Mr. Saltsman had informed Ms. Clayton that, when the contract was re-written, he wanted the name of the buyer changed.

The Court of Appeals also pointed out that the fact that Mr. Saltsman never signed the contract was irrelevant as there was mutual assent by virtue of Mr. Saltsman’s offer of $950,000 and Mr. Mayfield’s subsequent acceptance.  As well, the statute of frauds only required that the “party to be charged,” which was Mr. Mayfield, had signed a writing memorializing the agreement.

Had this case not involved a contract for the sale of real property, which implicated the Tennessee statute of frauds, Mr. Saltsman could have prevailed even if neither party had signed a written agreement.  This is so because the testimony established that Mr. Mayfield and Mr. Saltsman had both mutually, albeit orally, assented to the sale of the storage facility for $950,000.

For Tennessee breach of contract attorneys, this case is an excellent refresher. For non-lawyers with potential breach of contract cases, it is a reason to consult with a lawyer rather than assuming that, since both parties did not sign the contract at issue, there is not an enforceable contract.