Summary of Mattei v. Hopper

Citation: 51 Cal.2d 119

Relevant Facts: Mattei was a real estate developer who sought to buy property owned by Hopper.  Mattei intended to create a new shopping center.  Mattei and Hopper negotiated the terms of a deal for a considerably long time, and Mattei and Hopper agreed to a sale price of $57,500.  Per the contract, Mattei had to provide a $1,000 deposit with Hopper’s real estate agency, and had 120 days to examine the title, and close on the property.  At closing, the balance of the sale price was due.  The agreement also included a clause in which if Mattei could not find suitable individuals or businesses to whom to lease space in the shopping center, the contract could be voided.  Prior to the expiration of the 120 day period, Hopper’s attorney informed Mattei that she no longer intended to sell her land.  Consequently, Mattei sued for breach of contract.

Issues: The legal questions presented were whether personal satisfaction clauses render a contract void in cases in which there is a lack of consideration or mutuality; if a party does not have a legal duty in making a promise, can an agreement still be considered a bilateral contract; and, must promises be mutually obligatory where there is an exchange of promises?

Holding: The Supreme Court of California answered in the negative for the first two legal questions, and in the affirmative for the last question.

Reasoning: The Court reasoned that when parties endeavor to create a contract in which there is an exchange of promises of consideration then those promises, regardless of party, become mutually obligatory.  A contract that does not include mutual obligation is unenforceable.  However, when there is a contract in which only one party is free to perform or withdraw from the contract, then the promise is illusory.  In short, if one party has made a good faith attempt at satisfying the obligations of a contract and actually satisfies said obligations, for the other party to unilaterally void the contract is improper. In the instance of this case, the previous favorable outcome for Hopper was reversed, and the case was remanded.

Conclusion: This case was important for its discussion on good faith actions, and contractual obligations as applied to mutual obligations.