I advertised my boat for sale last year through an online service. I was contacted by someone who appeared to be a serious and qualified buyer. We exchanged a few emails and arranged for him to inspect the boat. After the inspection he made me a verbal offer to buy the boat for $30,000, subject to sea trial, and I accepted his offer. The surveyor found the boat to be in excellent condition. But a week or so after the surveyor completed his report, the buyer started to get cold feet — and he informed me last week that he is backing out of the deal. I am now stuck with paying slip fees, insurance and maintenance until I can find a new buyer. This was a verbal agreement, but he failed to live up to his obligation to buy the boat — and it seems to me that I should be able to sue him to recover my expenses until I find a new buyer. Alternatively, is there any way I can force him to buy the boat?
According to an old legal proverb, “a verbal agreement is only as strong as the paper it’s printed on.”
This is a bit of an exaggeration, but even where verbal agreements would otherwise be enforceable, they often fail because the terms of the agreement are uncertain. Our reader’s problems begin with this question of uncertainty, but that’s only the start of a steep uphill climb.
Section 2201 of the Uniform Commercial Code addresses the difficulties that are inherent in a verbal agreement by requiring any agreement for the sale of personal property to be in writing where the sale amount is over $500. So, right out of the gate, our reader will be unable to enforce his agreement to sell the boat unless the emails that he exchanged with the buyer can be cobbled together to establish the terms of the agreement in writing.
If he is able to establish that his collection of emails amounts to a written agreement, he may nonetheless have difficulty enforcing that agreement, because there appears to have been no exchange of consideration. “Consideration” may be anything of value — and without an exchange of consideration, an agreement may be deemed to be a gratuitous promise and therefore unenforceable.
In a traditional yacht or real estate sale transaction, the buyer pays a deposit in exchange for the seller removing the property from the market during the inspection period. Each of these actions has a value associated with it, and this exchange of consideration is required for an enforceable contract.
Our reader did not require a deposit — and, as such, there appears to have been no exchange of consideration.
If our reader establishes that he had a written contract supported by an exchange of consideration, he may be able to pursue monetary damages, but he will probably not be able to force the buyer to buy the boat. When one party wants another party to go forward with a transaction, he seeks “specific performance” from that party. Specific performance is available only where monetary damages cannot be calculated due to some unusual feature of the transaction.
Finally, the monetary damages that would be recoverable by our reader if he were able to prove a breach of a written contract are limited to those damages that were incurred as a result of the breach. They would include, for example, work performed on the boat solely at the request of the prospective buyer that did not otherwise benefit the boat (such as a cosmetic change requested by the buyer) or out-of-pocket expenses that were incurred during the inspection process.
Damages would not, however, include costs of continued ownership of the boat — such as slip fees, insurance and maintenance — since these are incidental costs associated with ownership of a vessel, and the owner may continue to enjoy the use of the vessel during the period that it remains for sale.
The consequences of a breach of a verbal sale contract, like most other legal disputes, will vary considerably for each failed transaction, so this should be viewed as an overview of the legal issues that the parties will confront rather than an exhaustive list. A buyer or seller confronting this type of dispute should consult an attorney experienced in vessel purchase and sale transactions.