## Facts

- Eric Forman, a chiropractor, signed a written offer on March 23, 1981, to buy Art Benson’s commercial property in Dixon, Illinois, for $125,000 under a 10-year installment contract at 9% interest.
- At the signing conference, Benson questioned Forman’s creditworthiness; the parties added a condition making the deal subject to “seller’s approving buyer’s credit report,” and Benson then signed.
- Forman paid $1,000 earnest money and provided a credit report Benson received on March 27, 1981; trial evidence characterized the report as generally “excellent.”
- At Benson’s request, Forman supplied additional financial information, including corporate tax returns.
- Over the following weeks, Benson discussed raising the price and increasing the interest rate.
- On May 14, 1981, Benson notified Forman he rejected Forman’s credit and attempted to return the earnest money; Forman refused.
- Forman sued for specific performance of the real estate contract; a bank loan officer testified Forman’s credit was “excellent,” while Benson cited outstanding debts and a tax-return loss as reasons for rejection.

## Issues

1. Whether a contract term conditioning the sale on “seller’s approving buyer’s credit report” is governed by an objective reasonableness standard rather than the seller’s purely subjective discretion.
2. Whether Benson’s rejection of Forman’s credit was unreasonable under the applicable standard.
3. Whether Benson’s delay and efforts to renegotiate price and interest constituted waiver of the condition or showed lack of good faith in invoking it.
4. Whether specific performance was an appropriate remedy for the seller’s refusal to convey the property.

## Decision

- The Appellate Court of Illinois, Second District, affirmed the decree ordering specific performance.
- The court treated the credit-approval term as a satisfaction clause tied to commercial judgment and therefore subject to objective reasonableness.
- The court agreed that Benson’s rejection was unreasonable given the favorable credit evidence and the nature of the objections offered.
- The court upheld findings that Benson’s conduct (delay after receiving the report and attempts to extract better economic terms) supported waiver and/or bad faith.
- Because the contract was definite and involved real property, the court sustained specific performance as the remedy.

## Legal Principles

- A satisfaction clause concerning commercial value or financial fitness is construed under an objective standard requiring reasonable judgment, not arbitrary refusal.
- Contractual discretion under a condition precedent must be exercised in good faith and consistent with the clause’s purpose.
- A condition inserted for a party’s benefit may be waived by conduct, including delay in acting on the condition and behavior inconsistent with insistence on strict compliance.
- Specific performance is an available remedy for breach of a definite real estate contract when the buyer is ready and able to perform and legal damages are inadequate.

## Conclusion

The court enforced the installment land contract and ordered specific performance, holding that the seller’s “credit-approval” condition required a reasonable, good-faith assessment of creditworthiness and could not be used as a pretext to avoid the bargain or to pressure renegotiation.


Forman v. Benson, 112 Ill. App. 3d 1070 (Ill. App. Ct. 1983)