645 P.2d 727
Plaintiff real estate developer appealed a decision from the Superior Court for King County (Washington), which entered a judgment in favor of defendant property owner individually and as executor of the estate of his late wife, in the developer's action to enforce an earnest money agreement for the purchase of realty owned by the owners.
OVERVIEW: The owners had listed their property for sale with a real estate broker. The broker subsequently offered the property to the developer. The parties signed an earnest money agreement subject to an engineer's satisfactory feasibility report. When the developer sought to enforce the agreement, the trial court determined that by making its obligations subject to a satisfactory engineer's feasibility report, the developer rendered its promise to buy the property illusory.
On appeal, the court reversed and concluded that the developer's promise was not illusory.
-The court found that the earnest money agreement created two conditions precedent to the developer's duty to buy the property.
-It had to receive the report and it had to find it satisfactory.
-The court found that the standard of evaluating the developer's satisfaction was good faith.
-The developer could cancel the contract only if it was not satisfactory, otherwise it had to give notice and purchase the property.
-Accordingly, the promise was not illusory and the earnest money agreement was supported by consideration.
-That the owners' agents failed to convey certain additional terms did not affect the validity of the agreement.
OUTCOME: The court reversed the judgment and remanded with instructions to enter a decree ordering specific performance of the earnest money agreement.
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