## Facts

- Chin, Inc. granted Washington Properties, Inc. (WPI) an eight-year option to purchase real property in exchange for an option fee payable in installments: $20,000 at execution and $10,000 on the first, second, and third anniversaries.
- The agreement stated that time was of the essence.
- The contract included a clause providing: “Chin shall obtain the consent of the current noteholder of the deed of trust of the Property to be bound by the terms of this Agreement.”
- WPI paid the initial $20,000 but refused to make the later anniversary payments, asserting that Chin had not obtained lender consent.
- WPI’s president testified the lender-consent clause was intended to ensure the option would survive foreclosure and to limit WPI’s investment risk.
- No foreclosure had occurred or was threatened when WPI withheld payments.
- Chin sued for breach of contract; the trial court granted summary judgment for Chin.
- WPI appealed, arguing the lender-consent clause was ambiguous and created a condition precedent to its payment duty.

## Issues

1. Whether the lender-consent clause created an express condition precedent to WPI’s obligation to make the annual option-fee payments.
2. If not an express condition, whether lender consent should be treated as a constructive (implied-in-law) condition precedent excusing WPI’s nonpayment.

## Decision

- The appellate court affirmed summary judgment for Chin.
- The lender-consent clause did not create an express condition precedent to WPI’s obligation to pay the option installments.
- The clause was not materially ambiguous and was properly construed as a promise by Chin, not a condition suspending WPI’s performance.
- The court declined to impose a constructive condition precedent; WPI’s nonpayment therefore constituted a breach.

## Legal Principles

- Contract terms are not construed as conditions precedent absent clear conditional language showing the parties’ intent to make performance contingent.
- Courts favor interpretations that avoid forfeiture and do not suspend a party’s performance unless the agreement plainly requires it.
- A clause stating one party “shall” do an act is typically a covenant (promise) unless the contract ties the other party’s duty to that act through express conditional language.
- Constructive conditions are imposed sparingly and generally only when necessary to prevent serious injustice or to reflect the contract’s evident exchange structure.

## Conclusion

The court held that the lender-consent provision was a covenant by Chin rather than a condition precedent to WPI’s duty to pay option installments, and it refused to imply a constructive condition; WPI’s refusal to make scheduled payments breached the option contract, so judgment for Chin was affirmed.


Washington Props., Inc. v. Chin, Inc., 760 A.2d 546 (D.C. 2000)