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27. Is the buyer likely to prevail?
A seller and a buyer entered into a contract obligating the seller to convey title to a parcel of land to the buyer in exchange for $100,000. The agreement provided that the buyer's obligation to purchase the parcel was expressly conditioned upon the buyer's obtaining a loan at an interest rate no higher than 10%. The buyer was unable to do so but did obtain a loan at an interest rate of 10.5% and timely tendered the purchase price. Because the value of the land had increased since the time of contracting, the seller refused to perform. The buyer sued the seller.
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A is incorrect. This statement of the law is much too broad to be true. Courts look beyond the words of a condition, and if it is clear that the purpose of the condition was to benefit or protect one of the parties, the language of the condition will be interpreted as if that intention had been embodied in the contract terms. In this case it is clear that the language of the condition was intended for the benefit of the buyer, and so the seller's duty was not subject to the condition.
B is incorrect. The issue in this dispute does not concern modification of the contract. The parties did nothing which could be interpreted as an attempt to modify the agreement. The issue is whether the seller's duty was conditional. Courts look beyond the words of a condition, and if it is clear that the intent of the condition was to benefit or protect one of the parties, the language of the condition will be interpreted as if that intent had been clearly expressed in the contract terms. In this case it is clear that the condition was intended for the benefit of the buyer as a condition to the buyer's duty. The buyer's waiver of the condition required the seller to perform despite the nonoccurrence of the condition.
C is incorrect. While it is true that the buyer changed position because of the seller's promise, that fact is not relevant to the question of whether the seller's duty to perform was subject to a condition. Courts look beyond the words of a condition, and if it is clear that the intent of the condition was to benefit or protect one of the parties, the language of the condition will be interpreted as if that intent had been clearly expressed in the contract terms. In this case, it is clear that the condition was intended for the benefit of the buyer as a condition to the buyer's duty. The buyer's waiver of the condition required the seller to perform despite the nonoccurrence of the condition.