Chat with AI
Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller
Edition 9ISBN: 978-1111530624Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller
Edition 9ISBN: 978-1111530624 Exercise 24
Pack 2000, Inc. v. Cushman
Appellate Court of Connecticut, 126 Conn.App. 339, 11 A.3d 181 (2011).
www.iud.state.ctus
FACTS Eugene Cushman agreed to transfer two Midas muffler shops to Pack 2000, Inc. The deal included leases for the real estate on which the shops were located. Each lease provided Pack with an option to buy the leased real estate subject to certain conditions. Pack was to pay rent by the first day of each month, make payments on the notes by the eighth day of each month, and pay utilities and other accounts on time. Pack, however, was often late in making these payments. The utility and phone companies threatened to cut off services, an insurance company canceled Pack's liability coverage, and other delinquencies prompted collection calls and letters. When Pack sought to exercise the options to buy the real estate, Cushman responded that Pack had not complied with the conditions. Pack filed a suit in a Connecticut state court against Cushman, seeking specific performance of the options. The court rendered a judgment in Pack's favor. Cushman appealed.
ISSUE Can Pack exercise its option to buy the leased real estate even though it did not strictly comply with the condition precedent that required it to make payments on time?
DECISION No. A state intermediate appellate court reversed the lower court's judgment and remanded the case for the entry of a judgment for Cushman. A party retains its right to exercise an option to buy real estate only by complying strictly with any conditions precedent to its exercise of the option.
REASON The leases provided Pack with the option to buy the leased real estate. But to take advantage of the options, Pack had to comply with the condition precedent of making periodic payments to Cushman and to certain third parties by specific dates. Pack was often late in making these payments and thus did not strictly comply with the condition. The court reasoned that because of this failure of strict compliance, Pack lost the right to exercise the options to buy the real estate.
WHAT IF THE FACTS WERE DIFFERENT? Suppose that Pack had not made any late payments. Would the result have been different? Explain.
Appellate Court of Connecticut, 126 Conn.App. 339, 11 A.3d 181 (2011).
www.iud.state.ctus
FACTS Eugene Cushman agreed to transfer two Midas muffler shops to Pack 2000, Inc. The deal included leases for the real estate on which the shops were located. Each lease provided Pack with an option to buy the leased real estate subject to certain conditions. Pack was to pay rent by the first day of each month, make payments on the notes by the eighth day of each month, and pay utilities and other accounts on time. Pack, however, was often late in making these payments. The utility and phone companies threatened to cut off services, an insurance company canceled Pack's liability coverage, and other delinquencies prompted collection calls and letters. When Pack sought to exercise the options to buy the real estate, Cushman responded that Pack had not complied with the conditions. Pack filed a suit in a Connecticut state court against Cushman, seeking specific performance of the options. The court rendered a judgment in Pack's favor. Cushman appealed.
ISSUE Can Pack exercise its option to buy the leased real estate even though it did not strictly comply with the condition precedent that required it to make payments on time?
DECISION No. A state intermediate appellate court reversed the lower court's judgment and remanded the case for the entry of a judgment for Cushman. A party retains its right to exercise an option to buy real estate only by complying strictly with any conditions precedent to its exercise of the option.
REASON The leases provided Pack with the option to buy the leased real estate. But to take advantage of the options, Pack had to comply with the condition precedent of making periodic payments to Cushman and to certain third parties by specific dates. Pack was often late in making these payments and thus did not strictly comply with the condition. The court reasoned that because of this failure of strict compliance, Pack lost the right to exercise the options to buy the real estate.
WHAT IF THE FACTS WERE DIFFERENT? Suppose that Pack had not made any late payments. Would the result have been different? Explain.
Explanation
Verified
Verified
Contractual Conditions:
Contractual con...
Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
