## Facts

- C. Jon Handy sued M. E. Gordon and Edith Gordon for specific performance of a written contract to purchase the Gordons’ ranch property.
- The written agreement was contained in escrow instructions describing approximately 320 acres (excluding about three acres containing the sellers’ home).
- The stated purchase price was $1,500,100, with $300,000 recited as paid outside escrow and $100 deposited in escrow; the remainder was to be evidenced by a note secured by a deed of trust.
- The note terms included 2% annual interest, annual installments of $120,000 or more beginning three years after escrow closed, and a final maturity 10 years after closing.
- The sellers agreed to subordinate their deed of trust to construction and permanent financing to be obtained by the buyer, with specified maximum amounts per lot, maximum interest rates, and maximum maturities for each type of loan.
- The agreement contemplated the buyer’s efforts to obtain zoning modification and allowed withdrawal based on disapproval of specified reports; title was to vest in Handy or his nominee at close of escrow.
- Handy alleged the $300,000 outside-escrow payment recital was a sham, and that the true consideration was $1,200,100, which he alleged was fair and above comparable market prices.
- After the Gordons attempted to rescind, Handy filed suit; the trial court granted the Gordons’ motion for judgment on the pleadings, ruling the subordination clause lacked essential terms and made the contract too uncertain.

## Issues

1. Whether the subordination clause rendered the land-sale contract so uncertain that it was unenforceable and therefore not specifically enforceable.
2. Whether, accepting the complaint’s well-pleaded allegations as true, the complaint stated a cause of action for specific performance.

## Decision

- The California Supreme Court reversed the judgment on the pleadings.
- The Court held that the complaint stated a cause of action for specific performance.
- The Court held that the subordination clause was not fatally uncertain as a matter of law at the pleading stage because it specified key economic limits on the subordinated financing.
- The case was remanded for further proceedings.

## Legal Principles

- On a motion for judgment on the pleadings, all material, well-pleaded allegations of the complaint are accepted as true.
- A land-sale contract is not unenforceable for uncertainty merely because it contemplates future financing; the question is whether the material terms are sufficiently definite or reasonably determinable for equitable enforcement.
- A subordination provision may be sufficiently definite when it fixes or caps the economic parameters that define the seller’s subordination risk (such as maximum loan amounts, interest rates, and maturities).
- Allegations of fairness and adequacy of consideration, taken as true on the pleadings, may support enforceability where the contract’s terms otherwise provide meaningful limits on risk and performance.

## Conclusion

Because the complaint alleged a written land-sale agreement with a defined price and payment structure and a subordination clause containing specific numerical limits on future loans, the contract was not void for uncertainty on its face; the plaintiff therefore stated a claim for specific performance and was entitled to proceed beyond the pleadings.


Handy v. Gordon, 65 Cal. 2d 578 (Cal. 1967)