Delaware Litigation Lawyer & Attorney : Francis G. X. Pileggi : Corporate, Business, Commercial, Delaware Chancery Court

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Dittrick v. Shalfant, 2007 WL 1039548 (Del. Ch., Apr. 4, 2007), read opinion here.  This Chancery Court case involved an action for specific performance of an installment land sale contract for the purchase of a home.  The facts are somewhat involved, but for purposes of this summary I will highlight what I regard to be a memorable principle reiterated in this decision.  The most important aspect of this opinion is that the Court granted specific performance even though the agreement was missing the applicable interest rate.  Specific performance of a contract to purchase real property requires that the parties have agreed to “essential terms of the contract.” 

The Court found that Section 2301(a) of Title 6 of the Delaware Code provided the interest rate.  That statute provides as follows:  “Where there is no expressed contract rate, the legal rate of interest shall be 5% over the Federal Reserve discount rate.”  Thus, the Court reasoned that it was not applying the missing essential term of an agreement but rather the missing term was supplied by statute.

Moreover, the Court refused to apply the doctrine of unclean hands to bar an otherwise valid claim of relief where the doctrine would work an inequitable result.  So too, the Court did not find the type of fraud “or sharp practice” on the part of the litigant against whom the defense of unclean hands was presented.  Lastly, and of equal importance, the Court found that because of the substantial payments that had been made on the house, if specific performance was not granted a forfeiture would occur.  The Court relied on the equitable maxim that “equity  abhors a forfeiture.”  Thus, the Court noted that “it is not obliged to permit a party to get the advantages which a forfeiture would give him" and it will disregard a forfeiture occasioned by failure to comply with the very letter of an agreement, when it has been substantially performed.