3 - CERTIFIED ROPS AND ADMIN BUDGET

Home Browse Search

(3) perform its obligations."7 DOF is reading Section 34163 out of context and is therefore mistaken in its conclusion that the S.A. Venture Agreement is not an ongoing enforceable obligation. The obligation to pay the Fees was a legally binding and enforceable agreement of the Former Agency and is now a legally binding and enforceable agreement, and therefore an enforceable obligation, of the Successor Agency. As discussed above, if the DOF rejected the S.A. Venture Agreement due to the potential need to enter into future implementing agreements, AB 1484 (specifically Section 34177.3(a)) clarifies that Successor Agencies may enter into new obligations to the extent required by enforceable obligations. We dispute DOF's characterization of the S.A. Venture Agreements as requiring the Successor Agency to enter into new obligations; however, even if this was the case, AB 1484 clarifies that this is permitted when required by an enforceable obligation. The S.A. Venture Agreement is a legally binding agreement, enforceable in accordance with its terms. The fact that the Developer must perform future obligations to trigger the Successor Agency's obligation to pay the Fees or that future additional agreements may be required to implement the S.A. Venture Agreement does not render the agreement unenforceable. Contracts with executory provisions are nonetheless binding and enforceable under California law, as explained in more detail below. California Law Upholds Enforceability of Executory Contracts. On December 22, 2008, in a landmark decision emphasizing California's public policy favoring liberal enforcement of contracts, in Patel v. Liebermensch, (2008) 45 Cal.4th 344, the California Supreme Court held that an enforceable contract to sell real estate arises whenever the contract identifies the parties, the price, and a reasonably certain description of the property. If the parties do not agree on other so-called "non-essential" terms that might typically be included in a real estate transaction - such as closing date, title insurance, financing terms, due diligence periods and the like - California courts will supply such terms as are reasonable. Patel is thus sometimes known as the "Essential 3-P's" decision. In thus clarifying the law relative to the enforcement of real estate contracts, our Supreme Court emphasized the parties' intent controls. Under California law, where terms are sufficiently definite for a court to ascertain the parties' obligations and to determine whether those obligations have been performed or breached, a contract will be enforced! An obligation is enforceable where its provisions are sufficiently certain to make ascertainable the precise act that is to be done.9 A binding contract is created wherever its essential terms are clearly enough stated to allow the parties to understand what each is required to do, the contract is supported by consideration, 10 and the parties agreed to Emphasis added. 8 Weddington Prods., Inc. v. Flick (1998) 60 Cal.AppAth 793, 811; Boyd v. Bevilacgua (1966) 247 Cal,App.2d 272, 287; Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 500-501; Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 407. 9 Cal. Civ. Code, § 3390, subd. (5) (requiring that specific performance is only available where the agreement has terms sufficiently certain to make the precise act to be done clearly ascertainable). 10 Cal. Civ. Code § 1614 provides that "[a] written instrument is presumptive evidence of consideration." The S.A. Venture Agreement is, naturally, a written instrument, and provides presumptive evidence of consideration. Moreover, "[c]onsideration may be an act, forbearance, change in legal relations, or a promise." 1 Witkin, Summary of California Law (10th ed. 2005) CONTRACTS, § 202. Page 6 of 9 3-24