Beall v. Beall

Brief Fact Summary.

In 1968, Plaintiff executed an option agreement with Defendant and her husband to purchase their land. 1971, the option was not executed and the parties created another option agreement, which they later extended in 1975. In 1977, Defendant’s husband died. In 1978, Plaintiff notified Defendant that he was exercising the option and Defendant refused to sell. Plaintiff sued Defendant for specific performance. The trial court ruled in favor of Defendant on the grounds that the purported option extension was not supported by consideration. Plaintiff appealed.

Synopsis of Rule of Law.

If a purported option agreement is not supported by consideration, it is deemed to be a mere offer, which the offeree can specifically enforce if the offer is accepted before it expires or is otherwise revoked.

Facts.

Calvin Beall (Calvin) together with his wife, Cecilia Beall (Defendant), owned a parcel that was bordered on three sides by a farm, which was owned by Pearl Beall (Pearl), Calvin’s mother. In 1968, Carlton Beall (Plaintiff), Calvin’s second cousin, contracted to purchase the farm from Pearl and executed an option agreement to buy Calvin and Defendant’s property for $28,000. The option had a term of three years and was supported by consideration of $100. Plaintiff did not exercise the option. In 1971, the parties executed a new option agreement for a term of five years and supported by another $100 in consideration. In 1975, the parties extended the five-year option agreement for another three years, to February 1, 1979. The extension was provided for in a written addendum and was signed by both Calvin and Defendant, however, the extension did not provide for additional consideration. In August 1977, Calvin died and Defedant assumed full and sole ownership of the property. In May and September 1978, Plaintiff notified Defendant that he was exercising the option to buy her property. Defendant refusd to sell.

Issue.

Whether an optionee can force an optionor to specifically perform a transaction, where a purported option agreement is not supported by consideration, and the optionee chooses to exercise the option within the timeframe specified therein and prior to any revocation thereof.

Held.

Yes. The trial court’s ruling is reversed and the case is remanded for a new trial. If a purported option agreement is not supported by consideration, it is deemed to be a mere offer, which the offeree can specifically enforce if the offer is accepted before it expires or is otherwise revoked.

Discussion.

Under Maryland law, an option agreement is valid and binding if supported by consideration. Without consideration, the option is deemed to be a mere offer to sell for the period set forth in the option or until it is withdrawn. An offer may be withdrawn by the offeror at any time before acceptance, but if the offer is accepted before revocation or expiration, the offeror can be legally compelled to sell. In this case, the trial court only addressed whether the option extension was supported by consideration. Upon determining that it was not, the court should have gone on to consider whether there was a valid offer and acceptance for the sale of the property at issue. Because the trial court did not conduct the fact finding necessary to determine this issue, this court is unable to evaluate the matter further.