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Thursday, November 25, 2004

Cases—Conditions—"Clear and ambiguous" clause lets lessor off the hook

Pennsylvania_flag A condition is a condition, said a federal district court in Pennsylvania, and a real estate lessor was not in breach of its contract when it was unable to get the necessary government permits to allow it to build the building it had agreed to for the plaintiff.

A clause in the contract provided that neither party would be liable if the permits could not be obtained. The permit process, usually routine, got held up when the local township tried to extort cash and additional agreements out of the lessor by delaying the permits. Judge Lawrence Stengel, applying Pennsylvania law, held the the clause was a "clear and unambiguous" condition precedent to liablity; since the permits were not secured the lessor had no obligation to go forward.

Morgantown Crossing, L.P. v. Manufacturers & Traders Trust, 2004 U.S. Dist. LEXIS 22949 (E.D. Pa. Nov. 10, 2004)

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