Equitable Estoppel can Confirm an Oral Extension of a Contract | Business Transaction Newsletter

In the case of Jetton Developments v. Estate of Dorothy Huddleson, the Court dealt with the issue of whether there was an extension of a contract to buy real property that had expired under the terms of the contract. In the Jetton case, Jetton and Dorothy Huddleson entered into a contract to sell real property. The closing date was May 3, 2021. Jetton inquired from Mrs. Huddleson whether she would extend the closing date. According to Jetton, Mrs. Huddleson was comfortable to close on the date in the contract but would be willing to grant an extension. The seller’s real estate agent testified that Mrs. Huddleson agreed to a 30 day extension.

Paperwork was prepared for the extension, but it was never signed. Thereafter, Dorothy Huddleson died on April 30, 2021. The son, Roger Huddleson indicated he was willing to honor the contract. Then a month or so later, the son informed Jetton that he no longer wanted to sell the property. Jetton proceeded with the process of its due diligence in reliance upon Roger Huddleson earlier advising that he would agree to extend the closing date. Roger Huddleson did not close on the contract, and Jetton brought suit to seek specific performance. The issue the Court dealt with was whether there was a valid extension of the contract closing date.

The Court ruled that Roger Huddleson was equitably estopped from denying the extension of the contract. The Court wrote that conduct giving rise to an estoppel includes omissions as well as commissions stating that “silence, failure to act, or acquiescence may be sufficient to invoke equitable estoppel where, in context, they reasonably misled another.” The basic premises is that once a party acts or refrains from acting in such a way as to indicate agreement, and then another party reasonably relies on that indication of agreement, then the first party cannot later assert a contrary position. The Court found that the parties fully acquiesced in the extension of the closing date by oral communications. Specifically, the Court found that Roger Huddleson sat idly while Jetton detrimentally relied on Roger Huddleson’s silence.

The Court further noted that acquiescence arises when a person knows or ought to know that he is entitled to enforce his rights or to impeach a transaction neglects to do so for such a time as would imply that he intended to waive or abandon his rights.

MY COMMENT: Cases such as the Jetton Developments case are very fact specific. A slight change in facts possibly could have resulted in a different outcome.

Yours very truly,

RAINEY, KIZER, REVIERE & BELL, P.L.C.
William C. Bell, Jr., Attorney at Law

This letter is intended to provide you with ideas for consideration in commercial transactions.  It is not intended to give a general solution applicable to all apparently similar individual problems, since slight changes in facts may require variance in legal advice.  Please contact legal counsel with specific questions.