ORLANDO, Fla. — Buyers and sellers should be careful when adding clauses to their contracts. If that clause lacks precision, one or both sides could suffer.
Florida Realtors® purchase and sale agreements include blank lines for additional terms, which can be used to modify existing parts of the form. This can be a helpful tool for parties that want to change default provisions. At the same time, parties should use precision when attempting to add, delete or change parts of the contract.
Bowein v. Sherman is an appellate case decided in Florida’s 6th District Court of Appeals. It’s a case where neither party got what they intended, due to how they used the blank space for additional terms in a form contract. While this specific contract was not a Florida Realtors form, the sections in question (property description and additional terms section) are essentially the same as what’s in our form purchase and sale agreements.
The seller listed four properties for sale, with each MLS listing describing the purchase price as $2.5 million per property.
On the first page of the contract, the real property (address and legal description) was described as just one of the four properties. The purchase price was $2 million.
Eight pages later, in the blank space for additional terms, another clause provided “The offer is for” all four properties. The addresses and legal descriptions for each property were included.
The question the court had to answer is whether this was a contract for the sale of one property or four properties.
The trial court ruled in favor of the buyer. It held that the second clause didn’t conflict with the first and that, when read as a whole, the additional clause section controlled. It ordered that all four properties be sold to the buyer for $2 million.
The seller appealed to the 6th District Court of Appeals. The appellate court disagreed with the trial court and reversed the ruling.
The appellate court’s rationale was that these two descriptions of the property being sold created a patent ambiguity. In other words, the court couldn’t say for certain whether this is a contract for sale of one property or four. Once it determined a patent ambiguity exists, the parties can’t submit evidence outside of the contract (often correspondence and conversations) to show what they intended the contract to say.
As a result, the appellate court concluded the contract was void, which means it’s as if there never was a contract between the buyer and seller.
What could the buyer and seller have done differently to have an enforceable contract? If there was room in the form to insert all parcels at the beginning, where the contract asks for the addresses and legal descriptions, that should work, provided the description clearly describes all the property to be conveyed. If there’s not enough space in the blank, it’s also possible to put something like “See attached Rider #1” and then write out the full legal description for all parcels to be conveyed in that other location.
While this case can serve as a cautionary tale to consumers who choose to add their own additional language, properly prepared amendments can be a valuable tool to modify default provisions in a form contract. However, parties should use as much precision as they can when drafting. If they want to address significant issues, like the description of property to be conveyed in a multi-million-dollar transaction, they may want to consult a lawyer with solid drafting skills to assist them.
Note: Information deemed accurate on date of publication.
Joel Maxson is Associate General Counsel
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