An architect agrees to design a building for a real estate developer if the developer secures financing from a specific bank. The agreement states that obtaining financing from this bank is a required condition for the architect’s obligation to perform. After several weeks, the developer informs the architect that the financing with this bank fell through, but offers to proceed by obtaining financing through another lender. The architect refuses and claims they are no longer obligated to perform. Is the architect correct?
No, because the developer obtained financing from another lender.
Yes, because the obligation to perform was subject to the developer obtaining financing from a specific bank.
No, because the architect should have performed based on an alternative financing arrangement.
Yes, because the developer did not notify the architect in a timely manner.
The architect’s obligation was subject to the developer securing financing from a specific bank, as stated in their agreement. When the developer could not obtain financing from that bank, the architect’s duty to perform was excused. Under contract law, the non-occurrence of an express condition precedent discharges the associated duty unless the condition is waived, renegotiated, or excused.
The alternative option [updated incorrect answer 1] is incorrect because securing financing from a different lender does not satisfy the specific condition that triggered the architect’s obligation. Contract terms are generally respected as written unless formally modified by both parties.
Option [incorrect 3] is incorrect because a failure to notify the architect promptly does not alter the fact that the condition precedent of securing financing from the specified bank was not fulfilled, which excuses the architect’s obligation.
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