South-Western Legal Studies in Business

Sales Practice May Not Be Breach of Contract But Deceptive Sales Practice
Description Florida appeals court held that a real estate developer might have engaged in deceptive sales practices in violation of state law, even though the developer’s sales agreements did not form valid contracts that could provide the basis for breach of contract suit.
Topic Contracts
Key Words Option Contract; Deceptive Practices; Bait and Switch
C A S E   S U M M A R Y
Facts Fendrich signed an agreement with real estate developer RBF that supposedly gave him the right to enter into a contract to buy a home on a specific lot at a fixed price. A refundable deposit of $25,000 was made. Five months later, when the purchase agreement was to be executed, Fendrich claims he was offered an inferior lot at a higher price. He sued RBF for breach of contract, specific performance, and violation of Florida’s deceptive practices act. The trial court dismissed the suit; Fendrich appealed.
Decision

Reversed in part. The “reservation agreement” made between the parties was not a valid option contract that would give Fendrich a claim for breach or specific performance. The agreement contained a clause that allowed either party, at any time, to terminate the agreement. An option contract to buy land is irrevocable by the seller until the expiration of a time limit. However, Fendrich does have a claim for deceptive sales practices. State law prohibits practices “likely to mislead consumers.” This could be found to be a case of “bait and switch” in which the seller deceives a buyer into thinking he has the right to buy a specific piece of property at a certain price but is then offered inferior property at a higher price.

Citation Fendrich v. RBF, L.L.C., --- So.2d --- (2003 WL 1239990, Ct. App., Fla., 2003)

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