Contractual Dispute – Real Estate – Substantial Variance

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WI Court of Appeals – District IV

Case Name: Mark McNally v. Capital Cartage, Inc.

Case No.: 2015AP2627

Officials: Kloppenburg, P.J., Lundsten and Blanchard, JJ.

Focus: Contractual Dispute – Real Estate – Substantial Variance

This case addresses whether an offer to purchase, procured by a real estate broker, contains substantial variances from the seller’s terms in the listing contract between the broker and the seller. This “substantial variances” issue affects whether the broker is entitled to a commission, even though the seller rejected the offer. The listing contract here, between the broker and the seller, was a standard form in statewide use. The form provides, in pertinent part: “Seller shall pay Broker’s commission, which shall be earned if, during the term of this Listing: … [a]n offer to purchase is procured for the Business … on substantially the terms set forth in this Listing ….” There is no dispute that the phrase “on substantially the terms” means that the broker must procure an offer that does not have a “substantial variance” from the terms in the listing contract. Accordingly, in this opinion we generally use “substantial variance” language, rather than the more cumbersome phrase “on substantially the terms.” We are asked to decide whether three terms in the offer at issue here are, as a matter of law, substantial variances from the listing contract. We conclude that this question is resolved by the holding in Libowitz v. Lake Nursing Home, Inc., 35 Wis. 2d 74, 150 N.W.2d 439 (1967), that a substantial variance in this context is limited to variances in offers that directly conflict with express terms in the corresponding listing contract. Our reading of Libowitz supports the circuit court’s rulings and, therefore, we affirm.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.