Problem

Scenario: Rentals, LLP (Rentals), an office equipment rental company, owns the land, office building and 2 warehouse buildings on which it has been operating. Rentals advertised the property "For Sale by Owner: $650,000" on a sign posted on the property, and in various news and sales publications.

A licensed real estate appraiser inspected and valued the property at $650,000. The 3 other partners in Rentals selected you to represent them in the sale of the property. Rentals moved its operations to a location across town where it now leases, under a signed contract with Business Spaces, Inc, larger office and warehouse facilities.

The 3 owners of Farmers Feed and Grain Company (Farmers) contacted Rentals to tour the property. Later, you, representing the partnership, accepted Farmers invitation to dinner to discuss the property and a possible sale. You and the 3 owners of Farmers had a leisurely dinner, and 2 glasses of wine each. At the end of dinner, the Farmers owners offered Rentals $475,000 for the property in an all-cash deal, and you accepted on behalf of the Rentals partnership.

Farmers owners and Rentals partners signed a sales contract for the sale of the property for $475,000, but before the deal was completed and before the deed was transferred to Farmers, Rentals' financial advisor urged Rentals to cancel the contract claiming that the contract was unenforceable because the price offered for the sale was too low and below the appraised value. You, as a representative of Rentals, met with the financial advisor about the matter.

Following the meeting, prepare a memo to the other Rentals partners about the deal with Farmers, advising them about the deal, whether it is valid and enforceable, and why or why not.