Saturday, January 4, 2014

Covington v. Robinson case brief

Covington v. Robinson case brief summary
723 S.W.2d 643 (1986)

Plaintiff prospective purchasers of land appealed a judgment of the Circuit Court of Shelby County (Tennessee), which granted the motion of defendant farm management company for summary judgment in the prospective purchasers' action to recover the earnest money they lost when the sale did not go through.

The prospective purchasers' contract called for them to obtain financing for 75 percent of the purchase price. However, they were only able to obtain 73.89 percent of the purchase price, so they refused to go through with the sale. The farm management company kept the earnest money deposit of the prospective purchasers, claiming that a breach had occurred. The purchasers sued to recover the earnest money deposit.


  • The court found that the trial court was in error in holding that the obtaining of a loan in the amount of 73.98 percent was substantial performance which excused the non-occurrence of the condition precedent. 
  • However, it held that the trial court's finding of lack of reasonable diligence or good faith was proper. 
  • Asking for a "maximum loan" and actually applying for a loan 1.2 percent short of what was required by the contract, and never at anytime specifically requesting the 75 percent in order to make the deal, together with no request for the additional amount after the 73.98 percent was approved, was sufficient evidence of lack of good faith. 
  • The judgment in favor of the farm management company was affirmed.

The judgment of the trial court granting summary judgment to the farm management company was affirmed in the prospective purchasers' action to recover their earnest money.

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