D accepted the offer. The transaction was subject to P receiving an engineer's and architect's feasibility report.
If the report was satisfactory to P, P would notify seller in writing. If nothing was sent, sale would be void.
After the report was done, P and D met to discuss terms and an agreement was reached.
Later, D refused to proceed with the sale.
Procedural History:
Lower court found for D.
Reversed on appeal, found for P.
Issues:
Is a contract with a personal satisfaction clause still enforceable even though the promisor is under no real obligation to perform any action?
Holding/Rule:
Contracts with personal satisfaction clauses are enforceable because the promisor has an implied obligation to exercise its personal satisfaction power in good faith.
Reasoning:
The promisor's duty to exercise his judgment in good faith is an adequate consideration to support the contract.
P was required to notify the D of its acceptance if the feasibility report was "satisfactory". (determination of "satisfactory" is bound to good faith analysis of the reports)
A limitation in a contract on a buyer's duty to follow through based upon personal satisfaction is still valid consideration as long as the limitation is not so great as to make the buyer's own promise illusory.
