High School

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123 Co. agrees to purchase a tract of land along the Henday for development from Pete, an old farmer. The agreement stated that 123 Co. would pay $5,000,000 on September 1, 2020, in exchange for Pete transferring the land. The contract contained the following condition: This sale is conditional upon Pete obtaining approval from the City of Edmonton to subdivide the land into three separate parcels as described in the enclosed plan of subdivision.

On September 1, Pete called 123 Co. and explained that he could not obtain subdivision approval from the City. Which of the following is most likely TRUE?

A. Since the condition was a true condition precedent, Pete cannot be held liable even if he made no effort to obtain subdivision approval.

B. Since the condition was a condition subsequent, Pete has no obligation to apply for subdivision approval from the City.

C. Pete is liable for breach of a subsidiary obligation if he did not make any attempt to secure subdivision.

D. This condition is really an option to terminate the agreement.

E. The result in this case will depend upon whether or not Pete made any attempt to obtain approval.

Answer :

Pete could be held liable for breach of subsidiary obligation if he failed to attempt to secure subdivision approval as required by his contract with 123 Co., given that the condition to obtain approval seems to be a 'true condition precedent'. The correct option is a.

The student's question asks about the consequences of failing to obtain a subdivision approval from the city as stipulated in a contract for the sale of land. If Pete did not make any effort to secure the subdivision approval as required by the contract with 123 Co., then he would likely be liable for breach of a subsidiary obligation. The contract clearly stipulates that the sale is conditional upon Pete obtaining approval to subdivide the land. The inability to secure such approval could render the agreement unfulfilled. However, it's important to note that this only holds true if the condition was indeed a 'true condition precedent', which would be a requirement that must be met before a contract becomes binding or before a party is obligated to perform under the contract. The correct option is a.

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