Importance of Contract Terms in Hassanpour v. Movahed 2022

Factual Overview of the Case

Regarding contracts, the importance of putting terms in writing can scarcely be overstated. As a general rule, all contract terms should be commemorated in writing, if at all possible. In some cases, verbal agreements will suffice and be enforceable in court, but in other cases, a verbal agreement will ordinarily not be sufficient. This is the case, for instance, when the “Statute of Fraud” applies to a given agreement. It recently illustrated the importance of putting contract terms in writing starkly in the case of Hassanpour v. Movahed (2022).

In this case, the husband and wife worked out a private marital settlement agreement during the divorce. The settlement agreement provided that the husband would buy out the wife’s interest in the marital home, and then the wife would sign over her interest on the deed. The husband was supposed to buy out the interests after a formal valuation. The valuation determined that the wife’s interests were in the range of $58,000 to $59,000. The husband subsequently made an offer to the wife: the husband agreed to give the wife a new BMW, valued at approximately $63,000, in exchange for the wife’s interests in the marital home.

The idea was that this new car would constitute consideration for interests in place of cash. According to the husband, the wife agreed, and the husband subsequently transferred a brand-new BMW to the wife. Perhaps not surprisingly, the wife then attempted to argue that the BMW was a straightforward gift from the husband and that it was detached from the settlement agreement entirely. In other words, in her view, the husband still owed her cash for her interests in the home, even though he had already transferred the BMW to her. Expectedly, the husband tried to collapse this argument.

The Doctrine of “Unjust Enrichment” and Contract Terms

Essentially, a verbal modification of the marital settlement agreement occurred between the husband and wife. They can modify these agreements, but ordinarily, this modification should be commemorated in writing. In some cases, the fact that the modification was purely verbal may have been problematic for the husband. In this case, however, the court applied the doctrine of “unjust enrichment” to avoid a catastrophic result for the husband. Because the wife accepted the vehicle, she could turn around and claim it was a gift.

If the court allowed her argument to pass, she would be unjustly enriched by the gift, as the husband would still need to pay her the $58,000 to $59,000! The court wouldn’t allow this to happen, so the doctrine of unjust enrichment applied.

Key Takeaway: Commit Everything to Writing Contract Terms

This case shows how the law can be unpredictable, especially for laypeople. Many people might assume the husband would be “out of luck” for failing to write the contract terms. And this might be a fair assumption if we only consider the formal elements of contract law. But, the law also has various mechanisms to prevent inequitable outcomes. The doctrine of unjust enrichment, like promissory estoppel, is one of those mechanisms.

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