Prochazka v. Bee-Three Development, LLC

Facts

P entered into a written agreement to purchase a commercial lot from D. During the inspection period P terminated the agreement and demanded that D return $7,000 in earnest money.  D refused. P sued for the earnest money. D counterclaimed for breach of contract and asked that the earnest money be forfeited to them as liquidated damages. The contract between the parties had two relevant paragraphs. 

4.1 Inspection Period. During the Inspection Period, …..Buyer has the right of access and determine generally the desirability and utility of the Property for Buyer's planned use of the Property. . . . Upon the expiration of the Inspection Period, the Earnest Money shall be non-refundable and 'at-risk' other than as a result of a default by Seller.

4.3 Right to Terminate. If Buyer determines, in its sole and absolute discretion, that the Property is not suitable for Buyer's intended use, then Buyer may terminate this Agreement by notifying Seller in writing of its election to terminate on or before the last day of the Inspection Period. If Buyer timely gives the notice on or before the expiration of the Inspection Period, this Agreement will terminate and the parties will have no further rights, liabilities, or obligations, except for those which are expressly to survive, and the Earnest Money, less the independent consideration paid to Seller shall be returned to Buyer. If Buyer does not timely give written notice of its election to terminate this Agreement, Buyer has no further right to terminate this Agreement pursuant to this Section. Upon the expiration of the Inspection Period, the Title Company is irrevocably authorized and directed to deliver the Earnest Money to Seller.

The court held that P had the sole and exclusive right to terminate the contract in its absolute discretion. The contract is clear in its meaning. It gave P summary judgment and D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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