Utah Court of Appeals
Can option agreements satisfy the statute of frauds when lot numbers are unknown? Coulter & Smith v. Russell Explained
Summary
Coulter & Smith held an option to purchase lots from Russell’s property after development and subdivision. When Russell attempted to sell to a third party instead, Coulter sued for specific performance. The trial court granted summary judgment for Russell on multiple grounds including statute of frauds violations.
Practice Areas & Topics
Analysis
In Coulter & Smith v. Russell, the Utah Court of Appeals addressed whether an option agreement for undeveloped property can satisfy the statute of frauds when the exact number of lots and total purchase price are unknown at the time of signing.
Background and Facts
Coulter & Smith and Russell owned adjacent parcels in Salt Lake County. In 1991, they entered a written agreement giving Coulter an option to purchase lots on Russell’s 3.67-acre property after Coulter completed development and subdivision. The agreement described the property as “your lots west of 1700 East at 10800 South” and set a price of $26,500 per lot. However, no lots existed at the time, and the parties didn’t know how many lots could be developed until Sandy City completed the annexation and zoning process. When Russell later attempted to sell to a third party, Coulter sued for specific performance.
Key Legal Issues
The trial court granted summary judgment for Russell, ruling the agreement violated the statute of frauds because it lacked adequate property description and price terms. Russell argued the agreement “describes nothing” since the land hadn’t been divided into lots, and the total price was unknowable without knowing the final lot count.
Court’s Analysis and Holding
The Court of Appeals reversed, finding the agreement satisfied the statute of frauds. The court applied the principle from Calder v. Third Judicial District Court that contracts are valid when they provide “a definite way to determine” uncertain terms “with no further agreement between the parties needed.” Here, the land description would be determined by Coulter’s development according to Sandy City requirements, and the total price would be calculated by multiplying the final lot count by $26,500. The agreement left “no room for further negotiations” between the parties.
Practice Implications
This decision provides important guidance for drafting option agreements involving undeveloped property. Practitioners can satisfy statute of frauds requirements even when specific details are unknown at signing, provided the contract establishes definite mechanisms for determining those details through third-party processes like municipal zoning decisions. The key is ensuring no further negotiations between the parties are required.
Case Details
Case Name
Coulter & Smith v. Russell
Citation
1999 UT App 055
Court
Utah Court of Appeals
Case Number
No. 951726-CA
Date Decided
February 25, 1999
Outcome
Reversed in part and Remanded
Holding
An option agreement containing a definite method to determine land description and price without further party agreement satisfies the statute of frauds even when the exact number of lots and total price are unknown at the time of signing.
Standard of Review
Correctness for questions of law; summary judgment reviewed for correctness, according no deference to the trial court’s legal conclusions
Practice Tip
When drafting option agreements for undeveloped property, ensure the contract provides a definite mechanism for determining uncertain terms like lot numbers and descriptions without requiring further negotiations between the parties.
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