Robert and Brenda Johnson brought suit against Aaron and Patricia Raatz on a promissory note executed pursuant to an agreement for the sale of a business, and the defendants asserted a counterclaim for the balance owed to the lien creditor of a van conveyed to the *290 defendants as part of the sale. On cross motions for summary judgment, the trial court denied the plaintiffs’ motion and granted the defendants’ motion. The plaintiffs appeal.
The material facts are not in dispute. The parties entered into a “Contract for Sale and Purchase” (the “agreement”) dated April 14, 1989, whereby appellants, the sole shareholders of the stock of East Metro Executive, Inc. (the “company”), as “Seller,” agreed to transfer to appellees, as “Buyer,” “free from all liabilities and encumbrances, [the company] including the goodwill . . . , and all other indicia of possession, furniture, equipment, merchandise and all other assets of the [company] . . . free and clear of any debts, mortgages or security interests except as stated herein.” The contract provided for the purchase price of $32,000 to be paid in eight installments, with $6,000 due on April 14, 1989, the closing date, $6,000 due on July 14, 1989, and the remaining payments due on July 14th of the six succeeding years. The contract, which was prepared by appellee Aaron Raatz, also provided, inter alia, that “Seller warr[a]nts that there are no known or undisclosed liabilities of [the company] and [agrees] to hold the Buyer harmless from any known or undisclosed liabilities” (paragraph 12); that “[a]ny secured party holding a lien on any asset to be sold hereunder shall consent to Buyer assuming such lien and indebtedness within 10 business days” (paragraph 14); and that “Seller shall convey title to said assets by Bill of Sale Absolute giving good and marketable title” (paragraph 17).
A separate document dated May 3,1989 and entitled “Inventory” was prepared pursuant to paragraph 4 of the agreement, which required an inventory of the items to be transferred to appellees in the sale. This document lists as an asset of the company a “1986 Plymouth Voyager Van” with a value of $10,000. It is undisputed that appellant Robert Johnson, not the company, had title to the van, and . that it was subject to a security interest held by Chrysler Credit Corporation. The parties agree that this van was to be included in the assets sold to appellees. Johnson testified by affidavit that prior to the April 14 closing date, he disclosed to appellees the existence of the security interest in the van. He averred that during the negotiation period he visited several automobile dealerships with appellee Aaron Raatz because Raatz was interested in trading the van for a newer model, and that a trade-in proposal prepared for Raatz by one dealer reflected that a balance of $8,027 was owed to Chrysler Credit on the 1986 van.
On April 25, 1989, Robert Johnson executed a bill of sale providing that “in consideration of [the] payoff value to Chrysler Credit ($8003),” he transferred title to the 1986 van to Aaron Raatz “free from all [e]ncumbrances.” Johnson averred that as part of this transaction he gave to appellees the coupon book used to make monthly *291 payments to Chrysler Credit. After execution of the agreement, appellees began paying to Chrysler Credit the monthly payments of $333.07 due on the van. When their July 1989 promissory note payment came due, appellees deducted from it the amount they had paid to date on the van. Appellants then filed suit to recover the amounts past due on the note, and appellees counterclaimed, asserting breach of the covenants obligating appellants to transfer the company assets free and clear of all encumbrances. The trial court held that appellees were entitled to the amount they had paid on the van obligation to date plus the amount of the remaining balance less the amounts they had withheld from the note payments.
In three enumerations of error, appellants contend that the trial court erred in its construction of the agreement and by finding that appellants breached the agreement so as to entitle appellees to recover on their setoff counterclaim. Appellants first contend a fact question remains whether the parties intended the van sale to be governed by the agreement or whether they made a separate contract for that transaction. Appellants base their arguments on the fact that on its face the agreement, which purported to transfer to appellees the assets of the company, does not appear to apply to the transfer of the van because the vehicle was owned by appellant Robert Johnson, not by the company. Nonetheless, a basic rule of contract construction is that we must “ ‘look to the substantial purpose which must be supposed to have influenced the minds of the parties, rather than at the details of making such purpose effectual.’ [Cit.]”
Friedman v. Friedman,
We disagree with appellants’ contention that the applicable provisions of the agreement are ambiguous and must be construed against appellees, as we find them to be plain, unambiguous, and capable of only one reasonable interpretation, and consequently, no construction is required or even permitted.
Crooks v. Crim,
159 Ga.
*292
App. 745, 748 (
Appellants did execute a bill of sale in compliance with this requirement, for the bill of sale transferring title to the van to appellees provided that title was conveyed free from all encumbrances. However, the undisputed evidence shows that appellants did not remove the Chrysler Credit lien. Accordingly, we agree with the trial court’s conclusion that appellants breached their obligation to provide clear title to the van, and that appellees were entitled to judgment as a matter of law.
Although this issue was not expressly raised by either party, we are compelled to recognize that when a defendant claims a right to a deduction from the plaintiff’s damages for breach of a cross obligation arising from the same contract, the proper remedy is recoupment, not setoff. OCGA §§ 13-7-2; 13-7-3; see
Byrom v. Ringe,
Judgment affirmed in part and vacated and case remanded in part.