delivered the opinion of the court:
The instant suit arises from a chancery action filed by plaintiffs, Thomas F. Schwinder and Susan L. Londay, seeking specific performance of a condominium purchase contract against defendants, Austin Bank of Chicago and Marian Baginski. Baginski subsequently filed a counterclaim, seeking possession of the condominium unit and claiming a rental rate of $1,500 per month. Following a bench trial, the trial court entered judgment for plaintiffs, granting specific performance and returning to plaintiffs a portion of rent they paid to defendant for November 2000. On appeal, defendants contend that the trial court abused its discretion in granting specific performance because the purchase contract granted defendants the exclusive right to terminate the purchase contract and limited plaintiffs to the exclusive remedy of the return of their earnest money. Defendants further contend that the subsequent preclosing possession agreement did not modify either of those provisions. Plaintiffs respond that defendants never had an unfettered right to terminate the purchase contract due to a mutuality of obligation that conferred on the purchase contract an implied covenant of good faith and fair dealing. Further, plaintiffs respond that if defendants ever had such a right, the preclosing possession agreement modified the purchase contract and terminated that right. Therefore, plaintiffs argue that the trial court properly granted specific performance of the purchase contract. In the alternative, plaintiffs claim that even if defendants had an unfettered right to terminate the purchase contract, they were estopped from doing so due to Baginski’s actions and plaintiffs’ detrimental reliance thereon. For the reasons that follow, we affirm the trial court’s ruling.
BACKGROUND
The record and testimony in this case reveal that on June 21, 2000, plaintiffs, Thomas F. Schwinder and Susan L. Londay, tendered an offer to purchase a condominium unit located at 3117 South Benson, in Chicago, Illinois, which was owned by defendants, Austin Bank of Chicago, trustee under trust agreement dated February 24, 1978, known as trust No. 5861 (hereinafter Trustee), and Marian Baginski. As the sole beneficiary of this land trust, Baginski was thus authorized to convey the title to plaintiffs.
On July 5, 2000, Baginski accepted the offer from plaintiffs to purchase the condominium unit. The purchase contract between the parties was a form real estate contract prepared by Baginski’s attorney and utilized for all real estate transactions in the Bridgeport Crossing Condominium complex in which the condominium unit was located. Relevant to this case is paragraph 12 of the purchase contract, which provided as follows:
“12. Termination and Default.
(a) If this Contract is terminated without Purchaser’s fault, the earnest money shall be returned to Purchaser, but if the termination is caused by the Purchaser’s fault, then at the option of the Seller and upon notice to the Purchaser, the earnest money shall be forfeited to the Seller and applied first to the payment of the Seller’s expenses; the balance, if any, to be retained by the Seller as liquidated damages. Return of the Purchaser’s funds shall be the Purchaser’s sole exclusive remedy in the event of Seller’s default. Purchaser acknowledges that the listing agent is hereby authorized by Purchaser to release the earnest money to seller upon written direction by the Seller that Purchaser’s fault has caused a termination of the contract.
(b) A failure to appear at the time and place stated in the notice of the closing date, a failure to furnish all requested credit information, or a failure to enter into an escrow agreement or to make the deposits required thereunder shall be a default. If the Purchaser shall fail or refuse to carry out any obligation of the Purchaser contained herein within three (3) days after receipt of written notice then, at the option of the Seller, the earnest money shall be retained by Seller as liquidated damages, and/or the Seller may elect any other available remedy. In the event Seller shall fail to be unable [sic] to deliver title to the property as herein provided on account of title defects which Purchaser is unwilling to waive and Seller cannot cure or secure insurance over, or if Seller fails or refuses to carry out any material covenant or obligation hereunder or if Seller declines to close and notifies Purchaser, this contract shall be terminated and the earnest money and interest shall be returned to Purchaser. The return of such earnest money shall be Purchaser’s sole and only remedy in such instance, the sufficiency of which is hereby acknowledged. Purchaser hereby waives all other remedies, other than a return of earnest money, which may be otherwise available to Purchaser.”
According to the record, attorney approval and other modifications to the purchase contract were completed on August 1,2000. Thereafter, closing of the sale and purchase of the condominium unit was originally scheduled for August 16, 2000. However, by mutual agreement of the parties, the closing was rescheduled for August 31, 2000, at the offices of Stewart Title. The purchase price for the condominium unit was $215,OOO 1 , which included certain “custom 2 ” items of construction.
According to the testimony of Schwinder and Londay, they deposited the earnest money and obtained mortgage approval as required by the purchase contract. They further withdrew $10,000 from their 401(k) retirement plan for use as the down payment on the purchase of the condominium unit. Also, they testified that they were ready willing and able to close the purchase of the condominium unit on the previously agreed-upon date. However, one day prior to the scheduled closing, plaintiffs were advised that the closing of the condominium purchase contract would be delayed due to an injunction entered in Baginski’s divorce action, No. 00 D 6184 (Cir. Ct. Cook County) (hereinafter Baginski divorce action). Because the plaintiffs’ lease on their previous residence was expiring on August 31, 2000, the plaintiffs needed possession of the condominium unit pending closing. In order to provide plaintiffs with possession prior to closing, Baginski’s attorney prepared a preclosing possession agreement (hereinafter PCPA). The PCPA was executed by plaintiffs and Baginski on August 31, 2000. Although the purchase contract, by its terms, prohibited possession of the condominium unit prior to closing, the PCPA granted possession of the condominium to plaintiffs until the seller, Baginski, “was able to close on the sale of the property.” The PCPA did not afford Baginski the right to terminate the contract 3 but, on the contrary, granted plaintiffs “the sole option [to] terminate this [PCPA] together with the Condominium Purchase Agreement *** by giving 30 days written notice to the seller” if closing had not occurred “on or prior to November 30, 2000.”
Schwinder testified that on August 31, 2000, pursuant to the PCPA, plaintiffs took possession of the condominium unit and he and his coplaintiff were to pay a monthly fee of $1,500 for the use and occupancy of the condominium unit. Pursuant to the express terms of the PCPA, the monthly fee of $1,500 was payable only “until such time as Seller is able to close on the sale of the property.” Plaintiffs also testified that after they took possession of the condominium unit, they purchased and installed a washer and dryer and made other such improvements therein.
Schwinder, Londay and Baginski testified that on August 31, 2000, they executed a “Punch List of Items to be Finished at 3117 South Benson” (hereinafter punch list) pursuant to the terms of the purchase contract. That day, Baginski repaired some of the punch list items. Then in early September, Baginski repaired additional punch list items; however, there are punch list items that remain unperformed.
On November 8, 2000, Judge Bellows entered an agreed order in the Baginski divorce action allowing the sale of the condominium unit to proceed. Baginski’s real estate attorney, Stephen Witt, was advised of the entry of the agreed order by a letter, in evidence, dated November 8, 2000, sent by plaintiffs’ attorney. That letter also requested that the plaintiffs be advised of possible closing dates so that a definitive closing date could be scheduled amongst the parties.
Baginski testified that after receipt of the letter of November 8, 2000, from plaintiffs’ attorney, he directed Witt to schedule a closing date. Baginski further testified that he was willing to close the sale of the condominium unit if the terms of the purchase contract were met. However, Schwinder and Loday testified that neither they nor their attorney received a response to the November 8 letter. There was no testimony or evidence introduced at trial regarding efforts made to schedule a closing for the sale of the condominium unit or an inability to do so. Likewise, the record is devoid of any facts that would excuse or explain Baginski’s refusal to consummate the sale of the condominium unit.
Schwinder and Londay testified that on December 15, 2000, they sent a certified letter to Baginski requesting that Baginski schedule a closing date for the purchase of the condominium unit. They obtained acknowledgment that Baginski received the letter, but never received a reply thereto. They further testified that the next month, Baginski requested rent payments for the months November thru January. Plaintiffs paid the rent for November, but plaintiffs refused to pay any further rent, claiming that they did not want to be renters; Baginski responded that the matter was in the lawyers’ hands.
Plaintiffs testified that they made one final attempt on January 16, 2001, to procure a closing date by sending Baginski’s attorney a letter to that effect. A response from Baginski’s attorney, in evidence, provided that he was no longer representing Baginski, and no closing date was scheduled in response to the January 16 letter.
On January 24, 2001, plaintiffs filed a complaint for specific performance against defendants. Defendants filed a counterclaim seeking possession of the condominium unit and claiming unpaid rent after November 2000.
On October 18, 2002, the trial court entered its judgment. The trial court found that the purchase contract and the PCPA were binding upon the parties. Despite the existence of paragraph 12 previously discussed, the trial court required specific performance on the part of Baginski in proceeding with the purchase contact. Further, the trial court denied Baginski’s counterclaim and found that Baginski was not owed rent after November 8, 2000, the date on which the agreed order in the divorce action granted Baginski the right to close on the condominium unit.
On November 18, 2002, defendants filed a motion for reconsideration. That motion requested a rehearing based on newly discovered evidence not available at the time of the trial and upon errors made by the trial court in application of the law. Specifically, defendants alleged that there were liens on the property that would have made it impossible for them to convey good title to the property. These liens, defendants alleged, were discovered after the close of trial. On January 27, 2003, the trial court denied defendant’s motion for reconsideration.
On February 7, 2003, defendants filed a petition for leave to appeal the decision of the trial court granting specific performance. This court granted the petition for leave to appeal pursuant to Supreme Court Rule 301 (134 Ill. 2d R. 301).
On appeal, defendants contend that the trial court abused its discretion in granting specific performance of the purchase contract. We affirm.
ANALYSIS
PCPA Modified the Purchase Contract
The controlling issue in this case is whether the plaintiffs had a right to seek specific performance when the purchase contract limited their remedy to the return of their earnest money. Defendants argue that, pursuant to the purchase contract, they had an unfettered right to terminate the sale of the condominium unit without suffering any loss other than the return of plaintiffs’ earnest money. Moreover, defendants argue that the PCPA did not modify these rights. Plaintiffs respond that their remedy was not restricted by the purchase contract and that the grant of specific performance was proper. Plaintiffs’ response is predicated on their claim that defendants did not have an unfettered right to terminate the purchase contract and return the earnest money because the PCPA modified the purchase contract, thereby divesting defendants of that right. In the alternative, plaintiffs respond that even if defendants had an unfettered right to terminate the purchase contract and return plaintiffs’ earnest money, they were estopped from doing so due to Baginski’s actions and plaintiffs’ detrimental reliance thereon. The trial court agreed with plaintiffs in finding that they were not limited to the return of their earnest money. In that regard, the trial court held that the execution of the PCPA modified the purchase contract and thereby superceded any right defendants had to terminate the purchase contract and only suffer the return of plaintiffs’ earnest money, which would return defendants to their original position. Moreover, the trial court found that the purchase contract was valid and enforceable and that the equities in this case warranted specific performance of that contract. We agree with the plaintiffs’ position and the finding of the trial court.
First, we must consider whether the PCPA modified the purchase contract so as to divest defendants of their right to terminate the purchase contract and return plaintiffs’ earnest money. In doing so, we must look to the definition and elements of a modification. A “modification” of a contract is a change in one or more respects which introduces new elements into the details of the contract, or cancels some of them, but leaves the general purpose and effect undisturbed. Hartwig Transit, Inc. v. Menolascino,
Parties to a contract are not locked into its terms forever. Accordingly, parties to an existing contract may, by mutual assent, modify the purchase contract provided that the modification does not violate law or public policy. 17A Am. Jur. 2d Contracts § 500 (2004). It is entirely competent for parties to a contract to modify or waive their rights under it and embed new terms upon it. See Canale v. Hulcher,
Under Illinois law, a valid modification of a contract must satisfy all the criteria essential for a valid original contract, including offer, acceptance, and consideration. Scutt v. La Salle County Board,
A modified contract containing a term inconsistent with a term of an earlier contract between the same parties is interpreted as including an agreement to rescind the inconsistent term in the earlier contract. Carabetta Enterprises, Inc. v. United States,
In this case, the PCPA was a later-written agreement regarding the same subject as the original contract, the sale of the condominium unit. Paragraphs 3 and 4 of the PCPA specifically provide as follows:
“3. *** Purchaser and seller do hereby agree to extend the closing date for the sale of the property as set forth in the contract until such date as seller receives a Court Order relieving seller from the temporary restraining order barring the transfer of the property or is otherwise able to close on the sale of the property.
4. *** If seller is unable to close on the sale of the property on or before November 30, 2000, then the purchaser at purchaser’s sole option may terminate this agreement together with the condominium purchase agreement jointly entered into by and between purchaser and seller.”
It is clear that the purpose of the PCPA was to serve as an adjunct to the purchase contract, altering contractual provisions and including additional obligations, while leaving intact the overall nature and obligations of the original agreement. Hartwig,
According to Illinois law, the PCPA was a valid modification to the purchase agreement, because it satisfied all the criteria essential for a valid original contract, including offer, acceptance, consideration and mutual assent. Scutt,
Finding that the PCPA was a valid modification of the purchase contract, to the extent that the PCPA contained inconsistent terms with the purchase contract, the PCPA should control. Downers Grove Associates,
Therefore, it is clear that the execution of the PCPA manifested the parties’ intentions, as concluded by the trial court, to modify the purchase contract by amending its terms to provide a solution to a problem not anticipated under the terms of the purchase contract; a solution that intended not only to progress the sale of the condominium unit, but also modify the purchase contract, thereby relieving defendants of existing rights and granting plaintiffs additional rights. That solution implied that the additional rights were inserted to entice plaintiffs not to forsake the contract despite the unanticipated delay. Consequently, those modifications and the language used in the PCPA are inconsistent with the retention of any right defendants had to terminate the purchase contract and only suffer the return of plaintiffs’ earnest money.
Therefore, we agree with the trial court’s determination that the PCPA modified the purchase contract and thereby superceded any right defendants had to terminate the purchase contract and only suffer the return of plaintiffs’ earnest money.
Estoppel
Despite this determination, we consider plaintiffs’ alternative estoppel argument, finding that even if the purchase contract had allowed defendants an unfettered right to terminate and held plaintiffs to the exclusive remedy of the return of their earnest money, defendants were estopped from asserting such rights. In that regard, plaintiffs contend that estoppel was based on Baginski’s actions and plaintiffs’ detrimental reliance thereon. Defendants respond that plaintiffs never testified that they relied on Baginski’s actions or changed their position in reliance on anything he did. The trial court found that the evidence proved that Baginski’s actions induced reliance and plaintiffs reasonably relied on those actions. We agree with plaintiffs’ and the trial court’s position.
An estoppel is an impediment or bar to the assertion of a right arising as a result of one’s own actions. Byron Community Unit School No. 226 v. Dunham-Bush, Inc.,
Even assuming arguendo that Baginski had an unfettered right to unilaterally terminate the purchase contract and limit plaintiffs’ damages to the return of the earnest money pursuant to paragraph 12 of the purchase contract, by his actions and conduct Baginski was estopped from asserting any such right. It is clear and undisputed that Baginski freely entered into the PCPA, allowing plaintiffs to take possession of the condominium unit prior to closing and planning the closing date to take place immediately after the injunction from Baginski’s divorce action was lifted. Baginski executed a punch list of items that plaintiffs wanted repaired in the condominium unit prior to closing, and Baginski repaired some of the items on the punch list. Baginski freely undertook and obtained an agreed order removing the injunction in the Baginski divorce as an impediment to closing. Further, Baginski did not try to terminate the purchase contract until after he was aware of plaintiffs’ suit for specific performance. In fact, Baginski never returned or tendered the return of plaintiffs’ earnest money. Notably, Baginski did not offer a reason for his failure and refusal to close on the property until his motion to reconsider. That motion to reconsider announced that the property was subject to a lien and therefore Baginski could not transfer good title to the plaintiffs. The trial court denied that motion, finding that the land was free of encumbrances. By these actions, Baginski clearly misled plaintiffs and induced their reliance.
Plaintiffs, as a result of that reliance, moved into and took up residence in the condominium unit, where they have remained for the past two years. They also made repairs and improvements to the condominium unit. One such improvement was the purchase and installation of a washer and dryer in the condominium unit. Further, plaintiffs withdrew money from their 401 (k) for the down payment and suffered penalties for doing so. If estoppel is not invoked in this case, plaintiffs would be the victims of a formidable injustice.
Based upon the foregoing, the trial court was correct in holding that even if Baginski had an unfettered right to terminate the purchase contract and limit plaintiffs’ damages, he would be estopped from asserting that right.
Specific Performance
We must now consider the substantive merit of defendants’ argument that the grant of specific performance was not proper even if the remedy under the purchase contract was not exclusive. Initially, it must be noted that specific performance may only be granted where there is a valid and enforceable contract. Omni Partners v. Down,
To counter that result, courts have found an implied covenant of good faith and fair dealing. Every contract contains this implied promise of good faith and fair dealing between the contracting parties. Restatement (Second) of Contracts § 205 (1981). These promises limit the manner in which the party who is vested with discretion under the contract may exercise it by requiring that party to exercise that discretion reasonably and with proper motive, not arbitrarily, capriciously, or in a manner inconsistent with the reasonable expectations of the parties. Abbott v. Amoco Oil Co.,
Furthermore, a contract should be construed as a whole to give effect to the intention of the parties. DeWitt County Public Building Comm’n v. County of DeWitt,
On the basis of the above-cited cases, we must interpret the disputed provisions of the present purchase contract, specifically paragraph 12, in such a manner as not to render meaningless the parties’ obligations to one another. See Borys,
The above interpretation of paragraph 12, which incorporates a duty of good faith and fair dealing, is supported by a large number of cases which hold that contractual language that, on its face, gives one or the other of the parties an unbridled right to cancel or terminate the contract must, if possible, be construed so as to sustain the validity of the contract in question. A.W. Fiur Co.,
Similarly, the courts have imputed good faith and fair dealing in real estate purchase agreements. See Borys,
Finding the purchase contract valid and enforceable, we must now consider whether the grant of specific performance was proper in this case. The principle underlying the specific performance remedy is to grant equitable relief where the damage remedy at law is inadequate. See Geist v. Lehmann,
“Two distinct elements enter into the application of [specific performance]: first, the extent to which the evidentiary function of the statutory formalities is fulfilled by the conduct of the parties; second, the reliance of the promisee, providing a compelling substantive basis for relief in addition to the expectations created by the promise.” Restatement (Second) Contracts § 129, Comment b, at 322 (1981). The evidentiary element can be satisfied by a meticulous examination of the evidence and realistic appraisal of the probabilities on the part of the trier of fact; commonly summarized in a standard that calls upon the trier of fact to be satisfied by “clear and convincing evidence.” Restatement (Second) Contracts § 129, Comment b, at 322 (1981). The substantive element requires consideration of the adequacy of the remedy of restitution. Restatement (Second) Contracts § 129, Comment b, at 322 (1981).
Illinois courts have long held that where the parties have fairly and understandingly entered into a valid contract for the sale of real property, specific performance of the contract is a matter of right and equity will enforce it, absent circumstances of oppression and fraud. Gianni v. First National Bank of Des Plaines,
Specific performance is a matter of sound judicial discretion controlled by established principles of equity and exercised upon a consideration of all the facts and circumstances of a particular case. Omni Partners,
In applying the requirements needed for specific performance, first, we must set forth that both plaintiffs and defendants freely and understandingly entered into a purchase contract for the sale of the condominium unit. There is no question from the facts in this case that there was no fraud or oppression by either party upon the other at the time of execution of the purchase contract. In fact, defendants note multiple times in their brief that both parties fully understood the purchase contract before they executed it.
Next we must turn to whether a condominium is the proper subject of specific performance. Although neither of the parties contends that specific performance cannot be granted when dealing with a condominium unit, the question of uniqueness is an issue of concern for courts. On one side is the argument that condominium units are real estate, per se unique and thus entitled to a remedy in equity. See Gianni,
Finding that a remedy at law was inadequate, the trial court found, and we agree, that it would be inequitable to deny specific performance in this case. The above-enumerated facts bear this out. Notably, plaintiffs paid the earnest money to defendants, took possession of the condominium unit, withdrew their 401(k) for a down payment, obtained mortgage commitment papers and made substantial improvements to the condominium unit. It would be inequitable for the court to allow plaintiffs to bear all the loss they suffered and move them out of their home when they complied with all of the terms of the agreement.
Furthermore, at all times during the pendency of the sales contract, plaintiffs were ready, willing and able to perform but were prevented, and thus excused, from doing so by Baginski’s refusal to schedule a closing date. Plaintiffs were ready with a mortgage approval and a down payment in hand to close on the condominium unit the very instant Baginski assigned a closing date. However, Baginski repeatedly refused to schedule the closing date, and thus, plaintiffs never consummated the sale of the condominium unit.
Based on the foregoing, the trial court’s determination to grant specific performance of the purchase contract was proper in this case.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
Affirmed.
O’MALLEY, EJ., and McBRIDE, J., concur.
Notes
Baginski testified that the purchase price for the condominium unit was never agreed upon; however, the trial court found that Baginski’s testimony was not credible. We agree with the trial court that the contract price was $215,000 based on the contract itself, Baginski’s verified answer to the complaint, an executed direction to convey trustee’s deed to Schwinder and Londay and the agreed order of November 8, 2000.
“Custom” items refers to plaintiffs’ choices of particular finishes they wanted the condominium unit to contain. These choices affected the contract price.
Baginski never attempted to terminate the purchase contract prior to plaintiffs filing a suit for specific performance.
According to the law of contracts, even if the PCPA had not modified the damages set forth in the purchase contract, the mere presence of a damages provision in the purchase contract would not have prevented plaintiffs from seeking specific performance. Rootberg v. Richard J. Brown Associates, 14 Ill. 3d 301, 302-03 (1973) (the fact that a contract provides for liquidated damages in case of failure to perform does not itself prevent a court from decreeing specific performance); Moritz v. Broadfoot,
Plaintiffs also contend that they are entitled to specific performance of the purchase contract because defendants, specifically Baginski, breached the implied covenant of good faith and fair dealing. While there may have been evidence of bad faith that would preclude Baginski from enforcing the exclusivity of remedy provided in the purchase contract and justify the imposition of specific performance, we find no need to make a determination that would substantiate that contention since we have ample reason to uphold the trial court’s determination for the reasons already discussed.