Yi v. Li
313 Ga. App. 273
Ga. Ct. App.2011Background
- Seller owned a Bruster’s franchise store and entered into a Purchase Agreement with Purchasers to sell their shares for $300,000.
- Closing was to occur by July 31, 2007 and conditioned on Bruster’s franchisor consent and landlord consent.
- Purchasers knew Bruster’s had not consented as of June 13, 2007 but proceeded to execute the Agreement and pay $230,000.
- Bruster’s withheld consent beginning August 2007; Purchasers continued to operate the store until December 1, 2007.
- Purchasers formally rescinded the Agreement on September 13, 2007; Seller refused to return funds or possession.
- Jury awarded Purchasers rescission and fraud damages; trial court later granted new trial on fraud, not rescission, and fraud claim was dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether rescission was proper for nonperformance | Purchasers contend nonperformance by Seller excused contract. | Seller argues no breach by Seller; condition precedent not met by Seller. | Rescission improper; lack of breach evidence; reverse and enter JNOV for Seller. |
| Whether Bruster’s consent as a condition precedent excused performance | Consent was a condition precedent; its nonoccurrence justified rescission. | Purchasers, not Seller, pursued consent; nonconformity not a Seller breach. | Consent was not a Seller breach; failure to satisfy it did not support rescission. |
| Whether the trial court properly denied the Seller’s JNOV on rescission | Evidence supported rescission due to nonperformance. | No substantial breach; no basis for rescission. | Error to deny JNOV; rescission unsupported by the evidence. |
Key Cases Cited
- Forsyth County v. Waterscape Svcs., 303 Ga. App. 623 (Ga. App. 2010) (breach must be material to defeat contract purpose)
- Lanier Home Ctr. v. Underwood, 252 Ga. App. 745 (Ga. App. 2001) (rescission requires substantial breach preventing performance)
- Desmear Systems v. Vines, 305 Ga. App. 730 (Ga. App. 2010) (condition precedent may excuse duties to perform)
- Forrest Cambridge Apartments v. Redi-Floors, Inc., 295 Ga. App. 840 (Ga. App. 2009) (limits on appellate review to preserved issues)