Low concepts

There is an expression sometimes used in Hollywood known as “high concept.” It refers to an idea for a movie so abbreviated that it could be written on the back of a business card. Tom Cruise's movie Top Gun, for instance, which led to last year's sequel, was supposedly sold to the studio based on the phrase, “Star Wars — with jets!” Cruise's next movie, Days of Thunder, was likewise described as, “Top Gun — with race cars!” And presumably, Cruise's original version of Mission: Impossible , which led to the godawful series of feature films, was sold as, “Just like the T.V. series — but with no plot!”

It isn't just Hollywood, however, where Californians do business on such a Lilliputian scale. A California court, for example, once decided a case involving a contract literally written on the back of a business card.

In March, 1965, real estate broker Charles Seck was approached by his old friend George Foulks. Foulks and his parents owned a ranch in Sacramento County that they were interested in selling. He asked Seck to determine a reasonable sale price for the ranch.

Within a short time, Seck informed Foulks that $2,000 per acre would be reasonable. Foulks agreed with the estimate, and asked Seck to act as his broker. Foulks declined to give Seck a conventional “formal” listing agreement, however, because he feared having “all my neighbors down on me for having raised the value of their property” if it became known the land was up for sale.

One might wonder why anyone would be upset that someone drove up value of their real estate, but in 1965 higher property values meant higher property taxes, too. (Proposition 13, of course, would prevent that today.) This was also before California adopted a system to protect agricultural land from development pressures caused by rising land values — farmers just don't like it when housing developments spring up next door.

Foulks assured Seck, “You know me, and I'm not going to cheat you out of a commission.” But even though Foulks wouldn't put the agreement in writing using a regular contract, Seck knew he had to put something in writing if he wanted to be sure he could collect his broker's commission later on.

So he sort of put it in writing. On the back of one of his business cards, Seck wrote down the terms of their agreement. He managed to get Foulks to date and initial the card.

Most of the terms were nevertheless so cryptic that later on, when a dispute did arise, Seck had to testify to explain them. For example, the agreement said, “310 M/L; 2000 per acre; ½ down; bal 5 years; 5 percent int.” This meant that Foulks was selling a ranch of “more or less” 310-acres at an offering price of $2,000 per acre. The buyer would have to deposit half the sales price into escrow, and pay off the balance over five years at five percent interest.

Most important for Seck, however, were the last items on the card. One said “6 percent comm” meaning Seck was to get a six percent commission if he found a buyer; and “10/1/65” — the date the listing would expire.

So, based on what may have been the world's smallest written contract, Seck set off to earn his commission. He made elaborate efforts to do so — hiring an engineering firm to prepare maps of the property, sending out flyers and other advertisements, and eventually finding a buyer who made an offer that Foulks initially accepted. Later, however, that transaction fell through, and Foulks sold the property to a buyer not referred to him by Seck.

Seck sued for his commission anyway. At the trial, the judge agreed that the business card (as explained by lots of other testimony and documents), was indeed a valid (if tiny) listing agreement. He dismissed the case in the middle of the trial, however, because the buyer to whom Foulks sold the property wasn't the one referred by Seck.

The court of appeal, however, reversed. It spent most of its opinion explaining why it agreed with the trial judge's ruling that the business card was a valid “contract.” But the judges also concluded that Seck had proven that he had completely performed his part of the “listing agreement” by finding a buyer who was willing and able to buy Foulks' property. It sent the case back for the trial court to hear the rest of the evidence.

Even though Mr. Seck was able to show that he had a contract in his case, however, the lesson of this case should be clear: always write your contracts on a proper piece of foolscap.

And leave the “high concepts” to Hollywood.