In 2007, real estate developer, Igor Krivoruchko, contracted with Ner Tamid Cong

Question

In 2007, real estate developer, Igor Krivoruchko, contracted with Ner Tamid Congregation of North Town, an Illinois not-for-profit corporation, to purchase property Ner Tamid owned on Rosemont Avenue in Chicago. After postponing the closing once, Mr. Krivoruchko refused to go forward with the deal because he said he could not obtain the kind of financing he hoped to get. The purchase contract contained no financing contingency clause, because, believing he was "creditworthy" and had not had problems in the past with the lender with which he was dealing, Mr. Krivoruchko did not desire one. Ner Tamid sued for breach of contract, and Krivoruchko defended, in part claiming commercial impracticability becuase he could not obtain the financing he wanted due to an "unanticipated" and "unforeseeable" downturn in the economy.

(1) What kind of clause (that is, the specific words) would you have put in the contract if you were the buyer and had taken this course to learn about contracts? (2) Generally, when should you consider including in a contract a clause that gives you a ‘back door’ out, thereby excusing performance? In other words, knowing what you now know, which kind of contracts will you want to use a commercial impracticability-type clause?

Explanation / Answer

If I would have been the buyer where large amount of money is required to close the transaction, I would have put a commercial impracticability clause where a condition will be put that the “finalization of the transaction is subject to availability of required fund”. Such condition will be put in those time where huge amount of money is involved and credit is required. It is not guaranteed that bank will definitely give the loan. In such situation a clause of commercial impracticability should be added so that the buyer can insulated from litigation.

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