In Java Enterprises, Inc. v. Loeb, Block & Partners LLP, Gideon Carter, et al. , Java and Carter entered into a contract of sale for an apartment. Carter later refused to close the deal because he was supposedly dissatisfied with the apartment's post-inspection condition.
Java informed Carter that the apartment had been swept broom-clean and in good repair at the time of closing -- as it had been on the contract date -- and asked Carter to itemize any alleged damage to the unit. Although he initially ignored that request, on November 17, 2004, Carter sent an e-mail which claimed "financial troubles" and that he couldn't close due to the high cost of renovations. Carter also conceded that the failure to close rested with him and that he understood his downpayment would be lost as a result.
Based on that evidence, the New York County Supreme Court found Carter in default of the contract and ordered the escrow agent to release the downpayment to Java.
On appeal, The Appellate Division, First Department, affirmed. While Carter contended that his November 17th e-mail was inadmissible under a state law which applied to "offers to compromise," since Carter conceded liability in that e-mail, that statutory protection didn't apply. (And even though the unit was sold to a another purchaser at a higher cost, the downpayment still could not be recouped.)
Caveat emptor! You never know when you'll get scalded by Java.
To download a copy of the Appellate Division's decision, please use this link: Java Enterprises, Inc. v. Loeb, Block & Partners LLP, Gideon Carter, et al.