Berryman v. Kmoch

Supreme Court of Kansas · Contracts

ContractsOption contractsConsiderationPromissory estoppelRevocation of offersoption contractconsiderationfailure of consideration

Facts

Berryman signed a written option dated June 19, 1973, granting Kmoch 120 days to purchase 960 acres of land and reciting consideration of "$10.00 and other valuable consideration," but the $10 was never paid. Kmoch, a real estate broker, had prepared the option and later claimed his time and expenses in trying to interest others in the land supplied consideration or supported promissory estoppel. In July Berryman told Kmoch he wanted to be released from the option, and before Kmoch attempted to exercise it, Berryman sold the land to another person. Kmoch learned in August from the Federal Land Bank representative that the land had been sold, then recorded the option and in October sent a letter attempting to exercise it.

Issue

Was the written option enforceable even though the recited $10 consideration was never paid, either because other consideration or promissory estoppel made it binding? If not, was the option effectively revoked before Kmoch accepted it?

Rule

An option contract to purchase land must be supported by consideration to be binding; without consideration it is merely a continuing offer to sell that may be withdrawn at any time before acceptance. Promissory estoppel can substitute for consideration only if the promisor should reasonably expect reliance, the promisee reasonably relies, and refusal to enforce would virtually sanction fraud or otherwise cause injustice. An offeree's power of acceptance terminates when the offeror takes definite action inconsistent with an intention to enter the proposed contract and the offeree acquires reliable information of that action.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Olivia Mercer, who owns 200 acres near Topeka, signs a 60-day written option giving Daniel Price the right to buy the land. The writing states it is given "for $500 and other valuable consideration," but both parties agree Daniel never paid the $500 and promised nothing else in return.

If Olivia sells the land to someone else before Daniel accepts, which is the strongest argument about Daniel's rights under the option?

Explanation. An option to purchase land must be supported by consideration like any other contract. If the recited consideration was never actually paid and no other consideration exists, the option is merely a continuing offer that may be withdrawn before acceptance. The majority also permits proof of failure to pay the recited cash consideration. (Derived from Berryman v. Kmoch (n.d.).)