Case: Omni Group, Inc. v.

Seattle - first National Bank

Parties: Plaintiff - (appellant) - Omni

Defendant - (appellee) - Seattle first national

Procedural History: Trial judge entered judgment for defendant, plaintiff

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?