A “Reasonable Time” Period does Exist
A reasonable time period does exist. The recent case of New Leaf Assets, LLC v. Jefrue, 50 Fla.L.Weekly D2673a (Fla. 4th DCA 2025) exemplifies this point.
In this case, an investment agreement was entered – investors invested money in exchange for a percentage of membership interests. The agreement contained an option that gave the investors the option to exchange their membership interest for a refund of their investment, and the refund was backed by a personal guaranty. The investors attempted to exercise the option two years later, but the company notified them that it re-invested the money. The investors filed a lawsuit for breach of contract against the company and personal guarantor. The company and personal guarantor argued that the option provision was silent as to the end date the option MUST be exercised; it just said that the option had to occur six months after the investment. Thus, the company and personal guarantor argued a reasonable time must apply and, here, the investors exercising the option two years later was unreasonable.
The company and personal guarantor argued that the temporal silence as to when the option must be exercised created a latent ambiguity and a “reasonable time” must be applied. The appellate court agreed:
A latent ambiguity exists when “a contract fails to specify the rights or duties of the parties under certain conditions or in certain situations . . . .” Here, the trial court interpreted the agreement to allow the investors to exercise their option at any time. However, the temporal silence in the option’s expiration gives rise to an ambiguity that required the court to impose a “reasonable time” for performance, notwithstanding the definiteness of the other contractual provisions. “A reasonable time is ‘ordinarily . . . a question of fact, the determination of which will depend upon all of the circumstances surrounding the particular offer and acceptance.‘ ”
For this reason, we hold the trial court erred in granting summary judgment for the investors. Despite the parties’ stipulation that no material issue of fact existed, one did exist — the reasonable time for the investors to exercise the option. We therefore reverse and remand the case for a jury trial to determine whether two years was a reasonable time for the investors to have exercised the option under the circumstances.
New Leaf Assets, supra (internal citations omitted).
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