An Agreement of Purchase and Sale for a commercial property contains a clause stating, 'This offer is conditional upon the Buyer obtaining satisfactory environmental due diligence reports, in the Buyer's sole and absolute discretion, by 5:00 PM on October 31st.' The buyer receives an environmental report identifying minor, easily remediable contamination. However, the buyer informs the seller they are not satisfied and will not waive the condition. What is the most probable legal outcome if the buyer terminates the agreement?

Question: An Agreement of Purchase and Sale for a commercial property contains a clause stating, 'This offer is conditional upon the Buyer obtaining satisfactory environmental due diligence reports, in the Buyer's sole and absolute discretion, by 5:00 PM on October 31st.' The buyer receives an environmental report identifying minor, easily remediable contamination. However, the buyer informs the seller they are not satisfied and will not waive the condition. What is the most probable legal outcome if the buyer terminates the agreement?

Answer options: ✅ The buyer has the right to terminate the agreement because the condition includes subjective discretion, making their dissatisfaction sufficient reason.

• The buyer must provide objective reasons for their dissatisfaction, as 'satisfactory' implies a reasonable person's standard.
• The seller can compel the buyer to complete the purchase, as the contamination was minor and remediable.
• The buyer is in breach of contract for failing to act in good faith and terminate without a substantial environmental issue.

Correct answer: The buyer has the right to terminate the agreement because the condition includes subjective discretion, making their dissatisfaction sufficient reason.

Explanation: When an Agreement of Purchase and Sale includes a condition that makes a party's satisfaction dependent on their 'sole and absolute discretion,' it creates a true subjective condition. Provided the buyer acts honestly and in good faith, their stated dissatisfaction, even if for minor issues, is sufficient grounds to terminate the agreement as the condition was for their 'sole' discretion, not for a 'reasonable person' standard.