## Facts

- A 21-story, 90-unit residential building at 5601 North Sheridan Road in Chicago was held in an Illinois land trust with American National Bank as trustee.
- The beneficial interest in the trust was jointly owned by two entities (Statesman and Associates) under a joint venture arrangement.
- B & B Investment Company (and its partners) submitted an offer to purchase the building; Associates accepted the offer “subject to” Statesman’s acceptance.
- Associates invoked a joint venture “deadlock” or buy-sell provision under which Statesman could either buy out Associates’ interest within a set time or, by inaction, allow the proposed transaction to proceed.
- Statesman did not act within the specified time under the deadlock clause; B & B arranged financing and prepared to close.
- Statesman later denied a binding contract existed, acquired Associates’ interest, and sold the property to a third party for a higher price.
- Plaintiffs sued for damages for breach of a contract to convey real estate; after a bench trial, the circuit court found a valid contract, found breach, and awarded $632,063.80 plus interest.

## Issues

1. Whether a binding contract to sell the property formed where one co-owner’s acceptance was “subject to” the other co-owner’s acceptance, and the other co-owner’s consent allegedly arose through inaction under a deadlock/buy-sell clause.
2. What is the proper measure of damages for a seller’s breach of a real estate sale contract: the difference between the contract price and a later third-party resale price, or the difference between the contract price and the property’s fair market value at the time performance was due (time of breach).

## Decision

- The appellate court affirmed the finding that a valid and enforceable contract existed and that defendants breached by refusing to convey.
- The court held the trial court used an improper damages measure by relying primarily on a resale price occurring about one year after the scheduled closing.
- The court modified/reduced the damages to the amount supported by evidence of fair market value at the time of breach (or when performance was due), rather than later market changes reflected in the resale.

## Legal Principles

- When a seller breaches a contract to convey real property, the usual expectation damages are the difference between the contract price and the property’s fair market value at the time of breach (or when performance was due), plus any properly proven additional losses.
- A later resale price may be relevant as evidence of value but is not controlling where it is remote in time or may reflect different market conditions.
- Contract formation may be established where a condition requiring a party’s acceptance is satisfied through that party’s inaction when the governing agreement provides that failure to act within a specified period operates as consent.

## Conclusion

The court held that Statesman’s failure to act under the joint venture deadlock provision satisfied the condition of acceptance and created an enforceable sale contract with B & B, but it reduced the damages because the buyer’s recovery must be based on fair market value at the time of breach rather than a later resale price.


Bachewicz v. American Nat’l Bank & Tr. Co. of Chi., 466 N.E.2d 1096 (Ill. App. Ct. 1984)