Ner Tamid Congregation of N. Town v. Krivoruchko
638 F. Supp. 2d 913 | District Court, N.D. Illinois | 2009
What This Case Means for Subcontractors
A real estate developer agreed to buy property from a congregation but refused to close because he couldn't get his preferred financing. The contract had no financing contingency clause. The court ruled the developer must perform the contract anyway—his financing problems don't excuse him from paying. This matters to subcontractors because it shows courts enforce contracts as written, even when circumstances change.
Key Takeaways
- •Always include contingency clauses in contracts if your payment depends on financing, permits, or other conditions outside your control. Without them, you're liable even if those conditions fail.
- •Courts won't let you out of a contract just because business got harder or market conditions changed. 'Impossibility' only applies to truly unforeseeable events, not economic downturns.
- •Don't rely on a lender's past performance or your own creditworthiness as a substitute for written contract protections. Get financing contingencies in writing or you own the risk.
Commercial contracts knowingly entered into are binding obligations on both parties.
Frequently Asked Question
Can I back out of a contract if I can't get financing?
Not unless your contract includes a financing contingency clause. Courts treat commercial contracts as binding obligations. If you didn't write in a financing contingency, you're responsible for performance even if lenders deny you or rates spike. Always negotiate contingencies upfront.
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