No, the bank does not have to give them the full loan. The rental income requirement was a critical, specific rule written into the contract. It was a condition, not just a suggestion. Think of it like a key that has to fit a lock perfectly—Brown-Marx's key didn't quite fit. The contract even had a backup plan (the smaller loan) for this exact situation, which shows how important the rule was. The court explained that the legal idea of 'substantial performance' (doing 'good enough') doesn't apply to these kinds of clear-cut conditions in a loan deal.

The rule of 'substantial performance' - which says doing most of what was required can be good enough - doesn't apply here. The loan agreement clearly said Brown-Marx had to bring in a minimum amount of rent to get the full $1.1 million loan. In Alabama, when a contract has a specific condition like that, the condition has to be followed exactly. Just coming close isn't enough, because that's not what the parties agreed to.

Also, the bank's refusal to make the loan wasn't fraud under Alabama law. The evidence suggests the bank may not have fully prepared to make the loan on time, possibly because changes in interest rates made the loan less appealing. But there wasn't strong evidence the bank misled Brown-Marx or never intended to make the loan if Brown-Marx fully qualified. In Alabama, breaking a contract promise alone isn't fraud - there has to be proof the promisor intended to trick the other party from the start.

In Alabama, "[a] mere breach of a contractual provision is not sufficient to support a charge of fraud."

As one court aptly stated, "[t] he `substantial performance doctrine provides that where a contract is made for an agreed exchange of two performances, one which is to be rendered first, substantial performance rather than exact, strict or literal performance by the first party of the terms of the contract is adequate to entitle the party to recover on it. "

The courts will allow recovery under the contract, less allowance for deviations, where a party in good faith has substantially performed its obligations.

But if in performing it, it is alleged that defendant negligently caused personal injury or property damage to plaintiff, the remedy is in tort, for it is not the breach of a contract express or implied, but the breach of an implied duty to exercise due care not to injure plaintiff or her property which is the gravamen of the action.

The court is aware of authority in the Eleventh Circuit stating the observation that the Alabama Supreme Court has applied the "substantial performance" doctrine almost entirely in connection with construction contracts.

U] nder Alabama law failure to fulfill promises does not give rise to actionable fraud unless it is alleged and proved that the representations were made with intent to deceive and with no intent at the time the representations were made to carry them out. Failure to perform a promise is not of itself adequate evidence of intent to support an action for fraud

It is possible for a tort to arise in Alabama out of a breach of a duty implied by or arising out of a contract, but the Alabama Supreme Court has stated that an ordinary breach of contract will not give rise to a tort

—concluding that a provision in a contract was a condition, not a promise, and that substantial performance was therefore insufficient to satisfy the provision

Substantial performance in this context is not sufficient, "and if relief is to be had under the contract, it must be through excuse of the non-occurrence of the condition to avoid forfeiture

No, the doctrine of substantial performance does not apply to this express condition precedent. A loan commitment is analogous to an option contract where conditions for acceptance must be strictly fulfilled, not merely substantially performed. The court reasoned that the minimum annual rental requirement was an express, numerically precise, and definite condition vital to the bank's security for the loan. Unlike in construction contracts where the doctrine is common, this was not a promise for an exchange of performances but a condition precedent to the lender's obligation. Furthermore, the contract itself explicitly provided an alternative—the floor loan—in the event this condition was not met, indicating the parties' intent that the rental figure be strictly achieved. The court also rejected the waiver argument, finding that the bank officer's general statements of satisfaction did not constitute an intentional relinquishment of a known right, especially since the bank did not yet know all the material facts about the deficient leases.

The doctrine of substantial performance does not apply to the express minimum annual rental condition precedent in the loan commitment. Alabama law requires strict compliance with express conditions precedent, and Emigrant was entitled to require Brown-Marx to fully satisfy the $714,447 minimum annual rental requirement before it was obligated to close the ceiling loan. The mere fact that Brown-Marx came close to fulfilling the condition is insufficient, because applying substantial performance here would frustrate the intent of the parties as unambiguously expressed in the commitment. 

Furthermore, Emigrant's failure to close the loan does not constitute fraud under Alabama law. While the evidence suggests Emigrant failed to adequately prepare to close the loan on November 1, 1979, potentially due to the loan being less desirable in light of changed market interest rates, there was no substantial evidence that Emigrant did not intend to honor the commitment if its terms were met at the time the alleged misrepresentations were made. A mere breach of contract, even if intentional, does not give rise to a fraud claim absent evidence the promisor intended to deceive and had no intent to perform at the time the promise was made.

Brown-Marx Associates, Ltd. v. Emigrant Savings Bank

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