Merritt Hill Vineyards Inc. v. Windy Heights Vineyard, Inc., 61 N.Y.2d 106 (1984) p 621.

• Merritt Hill entered into a written agreement with D to purchase a majority stock interest in respondent’s Yate County vineyard and a $15,000 deposit was made.
• The agreement provided Taylor (Windy Hill) would retain the deposit as damages if the sale did not close.
• Reasons Taylor could not keep the deposit in the event of no sale were if several "conditions precedent" were not followed. These were: WH should have obtained a title insurance policy in a form satisfactory to MH, and WH and MH should have received confirmation from the Farmers Home Administration that certain mortgages on the vineyard are in effect and that the proposed sale does not constitute a default.
• In April 1982, at the closing, P discovered that neither the policy nor the confirmation had been issued.
• P refused to close and demanded return of its deposit.
• D did not return the deposit.

P instituted action for return of the deposit and for consequential damages in the amount of $26,000. Special term denied P’s motion for summary judgement on both causes of action. The Appellate Division unanimously reversed Special Term’s order, granted plaintiff’s motion for summary judgement as to the cause of action for return of the deposit and granted summary judgement in favor of D dismissing P’s second cause of action for consequential damages. P appealed (the denial of damages) and D appealed (return of the deposit).

1. Was the undertaking to produce the mortgage confirmation a promise or a condition?
2. Does P have a right to return of its deposit or to consequential damages?

Stipulations in contracts are conditions by which the purpose of the contract is to follow. The primary purpose of the contract is the promise.

1. The contract requirements of a title insurance policy and mortgage confirmation are expressed as conditions of plaintiff’s performance rather than promises by defendants.
2. D’s failure to fulfill the conditions entitles P to a return of its deposit but not to damages.

1. No words of promise were ever used in the contract. The contract contained the heading "Conditions Precedent to Purchaser’s Obligation to Close." The obligation to complete the purchase is "subject to" fulfillment of those requirements. No words of promise were used.
2. Failure to fulfill a condition excuses performance but is not a breach of contract subjection the nonfulfilling party to liabilities.

Promise – a manifestation of intention to act or refrain from acting in a specified way so made as to justify a promisee in understanding that that a commitment has been made.

Condition – an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.