Mezzanotte v. Freeland
Court of Appeals of North Carolina
200 S.E.2d 410 (1973)
The Mezzanottes (plaintiffs) agreed to buy real property from the Freelands (defendants), with the sale contingent on the Mezzanottes obtaining a second mortgage from a specific bank on terms 'satisfactory to them.' The Mezzanottes could not get that particular loan but secured financing elsewhere, then tendered a $200,000 down payment plus a note and deed of trust for the balance. The Freelands refused to close, arguing the contract was illusory and unsupported by consideration because the financing condition let the Mezzanottes walk away for any reason. The trial court ruled the contract valid, finding the Mezzanottes' tender constituted substantial compliance, and the Freelands appealed.
Whether a contract lacks consideration when a promisor's obligation is conditioned on an occurrence, such as securing satisfactory financing, that the promisor has discretion to accept or reject.