The success or the failure of a contractual relationship is frequently a matter of faith. The buyers trust the sellers (or their agents) to play fair with them by providing a full and accurate account of the condition and the value of the subject matter of the contract. Does it always work out that way? Certainly not. Sometimes the seller makes a mistake.

Sometimes the buyer fails to hear or to understand what is said. Often there are things that interfere with the arrangement that no one notices until it is too late to undo the contract. It is at that point that the courts must get involved. A situation on point is the case of Urbanek v. All state Home Mortgage Company .

The plaintiff in the case, Edward Urbanek, was a landscaper who, at the urging of an agent of All State Mortgage, decided to get into the housing market as a way to compile an investment portfolio and improve his credit. At the prompting of two All State agents, Urbanek purchase three houses in Cleveland. The houses had been appraised, but there was no evidence that Urbanek ever received, read, or considered the appraisal, which was made some time before Urbanek visited or made an offer for the three houses.

Evidently Urbanek trusted the All State agents implicitly because, once he was told the asking prices of the three houses, he made his offer to purchase without challenging those figures. It was at this point that Urbanek's problems began in earnest. Urbanek had been told that the houses were being rented. Yet, after the sale, he found he could not collect any rent.

In fact, he began to suspect that the renters were fictitious. Later, he was asked for and, without hesitation, turned over $14,186.34 for repairs on one of the houses. As it turned out the house was never repaired and he never received a refund of that money. Perhaps even more telling, he never received keys for any of the houses at the closing.

Without the rental income, Urbanek could not keep up the payments and he tried to sell the houses. It was at that time that he learned from local realtors that the value of each property was overinflated. As a result, the houses sold in foreclosure, for prices that were appreciably under the original prices. The plaintiff sued All state and its agents along with Ace Home Loans, Inc., and its agents, and the appraiser. Who was the offeror in this case?

Who was the offeree? At what point did the acceptance go into effect? Did the actions of the agents disrupt the assent? Was fraud or mistake an issue here? What about undue influence? Any hint of that or duress? See if you can answer these questions as you read through this chapter on offer, acceptance, and mutual assent.

(See Urbanek v. All State Home Mortgage Company, 178 Ohio App.3d 493 (2008-Ohio-4871)).

Opening Case Questions

1. Would Urbanek v. All State Home Mortgage Company be a civil lawsuit or a criminal action? Explain

2. What law will the court apply in this case to answer the questions noted above? Will the court use common law or the Uniform Commercial Code (UCC)? Explain.

3. Who is the offeror in the sale of the houses and who is the offeree? Explain.

4. At what point is there a "meeting of the minds" in this case, if at all? Explain.

5. Does Urbanek have a case based on fraud in this situation? Explain.