Case

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Omni Group, Inc. v. Seattle - first National Bank Plaintiff - (appellant) - Omni Defendant - (appellee) - Seattle first national Trial judge entered judgment for defendant, plaintiff

Parties:

Procedural History: appeals.

Facts: husband & Wife, Clarks, executed an exclusive agency listing agreement with royal (Realty Co) for sales of approx. 59 acres of land. The broker subsequently offered the property to the developer, Omni. The parties signed an earnest money agreement subject to an engineer's satisfactory feasibility report. When the developer sought to enforce the agreement, the trial court determined that by making its obligations subject to a satisfactory engineer's feasibility report, the developer rendered its promise to buy the property illusory. Issue: Does the "personal satisfaction" clause in the agreement, casue it to be illusory, and therefore, not binding? Holding: On appeal, the court reversed and concluded that the developer's promise was not illusory. Reasoning: The court found that the earnest money agreement created two conditions precedent to the developer's duty to buy the property. It had to receive the report and it had to find it satisfactory. The court found that the standard of evaluating the developer's satisfaction was good faith. The developer could cancel the contract only if it was not satisfactory, otherwise it had to give notice and purchase the property. Accordingly, the promise was not illusory and the earnest money agreement was supported by consideration. That the owners' agents failed to convey certain additional terms did not affect the validity of the agreement. CLASS NOTES Omni Group, Inc. v. Seattle Limitation on Omni's discretion There was consideration - because there was good faith. Pg 106 - The court found that the standard of evaluating the developer's satisfaction was good faith. The developer could cancel the contract only if it was not satisfactory, otherwise it had to give notice and purchase the property. Accordingly, the promise was not illusory and the earnest money agreement was supported by consideration. The discretion Omni has is dependent on their satisfaction with the report. It is subjective, so it is assumed they are dealing in good faith. Although there was so much discretion reserved to Omni, it was going to operate in good faith. This tilted the court's decision in Omni. The burden to show that Omni was NOT operating in good faith would be on the plaintiff. Did Omni refuse in good faith?