Cantrell-Waind & Associates, Inc. v. Guillaume Motorsports, Inc.
968 S.W.2d 72 (1998)
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Rule of Law:
Every contract imposes an implied duty of good faith and fair dealing, which prevents a party from hindering or preventing the occurrence of a condition precedent to avoid their own contractual liability. If a party's bad-faith actions cause the non-occurrence of a condition, the condition is excused, and the party's duty to perform becomes absolute.
Facts:
- On August 1, 1994, Guillaume Motorsports, Inc. (Guillaume), represented by its president Todd Williams, leased property to Kenneth and Kay Bower with an option to purchase.
- The contract stipulated that the real estate broker, Cantrell-Waind & Associates, Inc. (Cantrell-Waind), would receive a $15,200 commission if the sale's closing occurred within two years, by August 1, 1996.
- On April 23, 1996, the Bowers exercised their option to purchase the property.
- Williams subsequently offered Mr. Bower half of the commission if he agreed to delay the closing until after August 1, 1996, but the Bowers declined this offer.
- The Bowers' loan was approved and all requirements for closing were satisfied by July 19, 1996.
- Williams informed the parties involved that he would be out of the country in late July and unavailable to close until after August 1, 1996.
- Williams refused a request to use a power of attorney to facilitate an earlier closing, but he did not actually leave the country and was in Bentonville from July 22-25.
- The closing occurred on August 14, 1996, and Guillaume refused to pay the commission to Cantrell-Waind.
Procedural Posture:
- Cantrell-Waind & Associates, Inc. filed a complaint for breach of contract against Guillaume Motorsports, Inc. in the circuit court (trial court).
- Guillaume moved for summary judgment, arguing it was not obligated to close the transaction by the commission deadline.
- The circuit court granted summary judgment in favor of Guillaume.
- Cantrell-Waind & Associates, Inc., as the appellant, appealed the summary judgment to the Arkansas Court of Appeals.
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Issue:
Does the implied covenant of good faith and fair dealing prevent a party to a contract from deliberately hindering the occurrence of a condition precedent in order to avoid a contractual obligation to pay a commission?
Opinions:
Majority - Sam Bird, Judge
Yes. The implied covenant of good faith and fair dealing prevents a party from deliberately hindering a condition precedent to avoid a contractual obligation. The court held that every contract imposes a duty of good faith and fair dealing, which obligates a party not to deliberately prevent or hinder the occurrence of a condition upon which their liability depends. Citing the established principle that 'he who prevents the doing of a thing shall not avail himself of the nonperformance he has occasioned,' the court found that Guillaume was obligated not to deliberately avoid closing the transaction before the August 1 deadline. Because Cantrell-Waind presented evidence that Williams misrepresented his availability to delay the closing, a genuine issue of material fact exists as to whether Williams's actions breached this duty and prevented the condition's occurrence. Therefore, summary judgment was improper.
Analysis:
This case reinforces the fundamental contract principle that a party cannot exploit a condition precedent for their own benefit through bad-faith conduct. The decision clarifies that the implied duty of good faith and fair dealing is not merely a passive obligation but an active one that prohibits a party from taking steps to prevent the satisfaction of a condition. It solidifies the 'prevention doctrine,' where the non-occurrence of a condition is excused if caused by the promisor's hindrance. This precedent serves as a crucial check on opportunistic behavior, ensuring that conditional obligations cannot be rendered meaningless by the very party who is supposed to be bound by them.
