A widow offers to sell her small business to a nonprofit organization. The contract is signed on June 1 and provides for closing at month-end. The organization’s agent orally informs the widow that the sale is conditioned on obtaining zoning-board approval to convert the office into an affordable-healthcare clinic. A week later the widow receives another offer for $35,000 and refuses to honor the contract. The organization sues for breach. The organization presents clear evidence that the zoning approval condition existed. What is the likely outcome?

• A. The organization loses because the ward’s lack of zoning approval negated the contract.
• B. The organization loses because the condition was not in writing.
• C. The organization wins because the condition was a material term supported by evidence.
• D. The organization wins only if the zoning board approves.

Answer: (C)

The main idea here is that contracts can be conditioned on a future event, known as a condition precedent. In this scenario, the deal was to close only if the zoning board approved converting the office to an affordable-healthcare clinic. That makes the zoning approval a material term of the contract because it directly determines whether the seller must perform. When a term like that is established as part of the bargain, closing is not a ready-to-close obligation; performance hinges on the third-party event occurring.

Because there is clear evidence that this zoning-approval condition existed as part of the agreement, the contract is understood to be conditional, not unconditional. The widow’s action—receiving another offer and then refusing to honor the contract—amounts to repudiation of an agreement that was to be performed only if the zoning condition was met. The existence of the condition is supported by the organization’s discovery of the oral instruction and the circumstances surrounding the deal, so the contract’s essential premise wasn’t an unconditional sale but a sale contingent on zoning approval.

The lack of a written form for that specific condition does not erase its effect; a condition precedent can be proven by evidence outside the writing when the contract’s terms, conduct of the parties, and surrounding circumstances support it. Therefore, the organization can prevail on the theory that the contract was conditioned on a zoning approval, a material term, and the widow’s attempt to back out before that condition occurred constitutes a breach of the conditional contract.