Legal Updates

Abandoning an obligation to act to change a planning status of land may be deemed a breach of contract

May 6, 2019

An owner of a land designated for hotels sold part of the rights in the land and the contract stipulated that the owner undertakes to act to change the planning status of the land in order to enable the building of vacation apartments and the contract was conditioned on approval of the change of the planning status. The change was not confirmed, the agreement did not enter into effect and the purchaser contended that the landowner did not promote the change of the plan and thus breached the contract.
The Supreme Court held that the landowner breached the contract. An obligation to change the planning status is an “duty to endeavor.” A breach of a duty of endeavor is a situation where a party to a contract attempted to achieve the expected result and was unsuccessful due to lack of skill, carelessness or negligence. In the case of a duty to endeavor, one must distinguish between a high level of responsibility, such as a commitment to "take all the necessary steps" and a commitment to "act reasonably". Here, the landowner took upon itself to take all the steps required to change the plana and bear all costs but it deliberately abandoned the contractual obligation due to the position of the Tourism Committee, while hastening to adopt this position without any real attempt to object and without updating the other party about it, and all for economic interests. Thus, the landowner prevented the meeting of the condition precedent and breached the agreement.