Chirichella v. Erwin

Court of Appeals of Maryland · Contracts

Contractscondition precedentspecific performancereal estate sale contractsettlement clausereasonable timetime not of the essencecontract construction

Facts

In June 1971, the Chirichellas agreed to sell their Silver Spring home to the Erwins for $39,200 using a standard realtor form contract. The settlement provision was amended from a fixed date to state that settlement would "Coincide with settlement of New Home in Kettering Approx. Oct. '71." The Chirichellas had separately contracted to buy that new home, but settlement on it never occurred because they claimed the house was not satisfactorily completed. The Chirichellas refused to settle with the Erwins, and after missed settlement dates the Erwins sued for specific performance.

Issue

Did the contract language stating that settlement would "Coincide with settlement of New Home in Kettering Approx. Oct. '71" create a condition precedent so that the sellers had no duty to settle unless they first settled on their new home? Or did the clause merely set the time for settlement, requiring performance within a reasonable time after October 1971?

Rule

Whether a contractual stipulation is a condition precedent is a question of construction that depends on the parties' intent as gathered from the words used and, if ambiguous, from other permissible aids to interpretation. A condition precedent is a fact, other than mere lapse of time, which must exist or occur before a duty of immediate performance arises; absent clear conditional language, a settlement clause that links performance to an approximate date or event may be construed as fixing a convenient time for performance rather than creating a condition precedent, requiring settlement within a reasonable time.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Raleigh, Nora Bennett agreed to sell her townhouse to Eli Romero. The contract's printed settlement clause was amended to read: "Settlement to coincide with seller's purchase of lake house approx. August," and the contract said nothing else about the lake-house purchase. Nora's lake-house deal collapsed, and three months after August she refused to close on the townhouse sale.

If Eli sues for specific performance, which argument is strongest under the governing rule?

Explanation. Whether a term is a condition precedent depends on the parties' intent as shown by the words used. A condition precedent is a fact, other than mere lapse of time, that must occur before a duty of immediate performance arises. Language tying settlement to another transaction, especially when paired with an approximate date and lacking clear conditional language, is construed as setting a convenient time for performance, not excusing performance entirely. Nora therefore had to close within a reasonable time after August. (Derived from Chirichella v. Erwin (n.d.).)