381 S.W.3d 152
Ark. Ct. App.2011Background
- In 2002 Hall and Tim Bias orally agreed to purchase about twenty acres for $25,000; there was no survey or legal description provided.
- Hall paid a $100 down payment on the mountain meeting, later paid an additional $400, totaling $500, and made monthly payments of about $240.32 until April 2007.
- In 2005 the Biases gave Hall a written contract stating a price of $25,000 with 11.5% interest for a 30-year mortgage totaling $87,000, which Hall did not sign.
- Hall believed she would pay around $5,000 total and that the contract terms, including no interest, matched the oral agreement; she later discovered the land boundaries did not match and that the Biases did not own the property outright.
- The trial court held there was no meeting of the minds and therefore no enforceable contract, but treated prior payments as if they were rent or forfeit, and ordered no refund to Hall.
- On appeal, Hall argued the court erred regarding forfeiture/waiver and the characterization of payments; the court reversed and remanded to determine an equitable remedy consistent with no enforceable contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there an enforceable contract between Hall and the Biases? | Hall argues there was a contract formed orally with mutual agreement on essential terms. | Biases contend there was no meeting of the minds and thus no enforceable contract. | No enforceable contract; remedy to be determined by unjust enrichment on remand. |
| Did Hall forfeit her payments by continuing to pay after recognizing differences in terms? | Hall contends there was no contract, so forfeiture should not apply. | Biases argue Hall waived rescission by continuing to pay. | Remand for a fact-specific unjust-enrichment assessment; forfeiture not upheld as a matter of law. |
| Did Hall waive her right to rescission by continuing to make payments while aware of differing terms? | Hall maintains there was no enforceable contract and no rescission to waive. | Biases rely on waiver principles from Herrick and Massey. | Waiver analysis inapplicable where no enforceable contract existed; remand for unjust enrichment remedy. |
| Should the payments be treated as rent given absence of a contract? | Hall seeks recovery based on unjust enrichment, not rent, since no contract existed. | Biases claim the payments functioned as rent during use of the land. | Remand to determine extent of unjust enrichment and fair-value offset. |
Key Cases Cited
- Herrick v. Robinson, 267 Ark. 576, 595 S.W.2d 637 (1980) (waiver of rescission in absence of fraud when continuing to pay under a contract)
- Massey v. Tyra, 217 Ark. 970, 234 S.W.2d 759 (1950) (waiver of rescission similarly tied to continued performance)
- Grisanti v. Zanone III, 2010 Ark. App. 545, 336 S.W.3d 886 (2010) (unjust enrichment as a remedy when no enforceable contract exists)
- Sparks Regional Medical Ctr. v. Blatt, 55 Ark. App. 311, 935 S.W.2d 304 (1996) (unjust enrichment/offset considerations in restitution)