## Facts

- Buyers and sellers executed a written contract for sale of a residence for $114,000, contingent on buyers obtaining a loan for $102,600; the financing clause left blanks for the loan term and maximum interest rate.
- The property appraised at $110,000, and the lender would not finance at the original price.
- The parties orally agreed to reduce the purchase price to $110,000 while keeping other contract terms.
- Before closing, the buyers paid $500 and took early possession of the house.
- A loan for 90% of $110,000 was approved and closing was scheduled, but the buyers refused to close, asserting unacceptable interest rate and closing costs and later raising a concern about title.
- The sellers retook the property and later sold it to a third party for $100,000.
- The trial court found an enforceable oral modification, held the buyers in breach, and awarded $10,000 (the $110,000 contract price minus the $100,000 resale price), denying additional consequential and punitive damages.

## Issues

1. Whether an oral modification reducing the purchase price of a land-sale contract is unenforceable under the statute of frauds.
2. Whether the buyers’ refusal to close was excused by alleged conditions precedent (acceptable interest rate, acceptable closing costs, and inclusion of the wife on title).
3. Whether the sellers could recover damages beyond the contract-resale price difference, including additional consequential items and punitive damages.

## Decision

- The appellate court affirmed the finding that the parties orally modified the contract price to $110,000.
- The court held the oral modification enforceable despite the statute of frauds because the buyers’ taking possession and $500 payment constituted part performance referable to the modified agreement.
- The court held the financing contingency was satisfied and the buyers’ refusal to close was a breach; subjective dissatisfaction with interest rate or closing costs was not a contractual condition.
- The court rejected the title-based excuse because the buyers did not rely on that fact when refusing to close and claimed to learn it only later.
- The court affirmed the $10,000 damages award and the denial of additional consequential and punitive damages.

## Legal Principles

- An oral modification to a written contract for the sale of land may be enforced when part performance removes the agreement from the statute of frauds.
- Taking possession and making a payment that is unequivocally referable to the modified agreement can constitute sufficient part performance.
- A party may not avoid a written contract by asserting subjective conditions (such as “acceptable” rates or costs) that are not stated in the contract’s financing contingency.
- Damages for breach of a real estate purchase contract are commonly measured by the difference between the contract price and the resale price; additional items may be denied when remote, speculative, or not shown to be proximately caused by the breach.
- Punitive damages are generally unavailable in a simple contract dispute absent proof of willful or malicious conduct.

## Conclusion

The court enforced an orally reduced purchase price because the buyers’ early possession and payment constituted part performance, held the buyers liable for breaching after financing was approved, and limited the sellers’ recovery to the $10,000 contract-resale price difference while denying additional consequential and punitive damages.


Johnston v. Curtis, 70 Ark. App. 195, 16 S.W.3d 283 (Ark. Ct. App. 2000)