## Facts

- A limited partnership owned approximately 286 acres in Yamhill County, Oregon, listed for sale through a real estate firm.
- A joint venture organized by a real estate broker negotiated to purchase the property, and the parties executed a written “Exchange Agreement” around March 6, 1970, with attached documents.
- The agreement required \$15,000 cash, conveyance of four parcels (subject to appraisal and acceptance by the seller), and payment of a \$173,600 balance on stated terms.
- Closing was conditioned on the buyers’ ability to negotiate with the City of McMinnville for a planned development satisfactory to both parties within 90 days, with a reasonable extension not exceeding six months if necessary.
- At contracting, the buyers knew municipal sewer service would not be available for several years and that development would require an expensive private sewage system.
- The buyers made preliminary planned-development proposals to the city planning commission, which responded favorably, but the buyers did not pursue final approval.
- The buyers abandoned the approval effort after concluding the project was financially unattractive due to private sewer costs and later told the seller they did not want to proceed.
- The seller refused to release the buyers and sued to compel specific performance; the trial court granted specific performance.

## Issues

1. Whether the buyers were excused from performance because the planned-development condition did not occur when they abandoned efforts to obtain city approval due to cost concerns known at contracting.
2. Whether the agreement was too indefinite to be specifically enforced, including the “satisfactory planned development” condition and the exchange/payment terms.

## Decision

- The Supreme Court of Oregon affirmed the decree of specific performance.
- The buyers were not excused by the nonoccurrence of the planned-development condition because they had an implied duty to make reasonable efforts to obtain approval and could not rely on a failure they caused by abandoning the process.
- The “satisfaction” component of the condition required good-faith judgment tied to the development approval subject matter, not dissatisfaction based on economic concerns already contemplated at contracting.
- The agreement’s essential terms were sufficiently definite, and any remaining uncertainty could be resolved from the contract documents and admissible extrinsic evidence.

## Legal Principles

- When a contract makes performance conditional on obtaining third-party governmental approval, the obligated party has an implied duty to use reasonable efforts to bring about the condition.
- A party may not invoke the nonoccurrence of a condition as a defense when that party unjustifiably prevents or hinders the condition’s fulfillment.
- “Personal satisfaction” conditions are enforceable but must be exercised in good faith and in relation to the subject matter of the condition, rather than as a pretext to escape a bargain for collateral reasons.
- Specific performance may be granted when the agreement’s essential terms are ascertainable from the writing and attached documents, with extrinsic evidence permitted to clarify intent where consistent with the agreement.

## Conclusion

The court enforced the real-estate purchase agreement by specific performance, holding that the buyers’ self-initiated abandonment of the development-approval process—based on cost risks known when they contracted—did not excuse performance and that the agreement was sufficiently definite for equitable enforcement.


W. Hills, Or., Ltd. v. Pfau, 265 Or. 137, 508 P.2d 201 (Or. 1973)