Details Count When Contracting to Buy/Sell Frac Sand Land
The Wisconsin Court of Appeals recently issued a decision instructive to both buyers and sellers of frac sand resource land. In Matejka v. Melnik, the plaintiff/buyer brought an action for specific performance on a purported contract to sell land, with a side agreement to increase the purchase price if the land was developed for frac sand over the next 10 years. The parties executed a Vacant Land Offer to Purchase for $525,000. The buyer also presented a separate document, which was never signed by seller, containing the term for an additional $110,000 of compensation to seller if the land was “flipped” for frac sand development. The Vacant Land Offer to Purchase made no reference to the side agreement.
The seller presented a standard form counter-offer increasing the price to $551,250, but making no reference to the side agreement. The buyer accepted the counter-offer. Shortly before closing, the seller presented an “Addendum to Purchase Agreement” which required payment of $450,000 if the land was flipped for frac sand. Buyer did not accept that Addendum, demanding the deal close on his terms. The closing did not take place.
The buyer commenced suit seeking to compel performance of the accepted counter-offer plus the original side agreement. The trial court, and the Court of Appeals, determined there was no enforceable agreement. The critical facts were that the agreements were handled separately with no effort to incorporate one with the other – effectively two separate, but related, offers. Moreover, there never was a signed agreement as to the frac sand component. Because the undisputed facts established that both parties intended the deal to include both the land and the frac sand side agreement, and no agreement was reached thereon, the court could not enforce any part of the deal.
If a party intends to engage in the purchase or sale of land and/or frac sand rights, as with any contract, it is critical to document the deal in writing and get all parties to sign the agreement.
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