Illinois Land Acquisition Case Shows Importance of Breach of Warranty Litigation in Chicago

A case out of Illinois decided recently by the 7th Circuit Court of Appeals in Chicago shows just how important it is to have strongly worded contracts when dealing with major acquisitions in Chicago.

Our Chicago business lawyers would also point out the importance of doing your due diligence on the environmental factors on a piece of property for sale in Illinois. That cuts to the heart of the matter in this Illinois case that was recently decided.

In 2000, the Wilder Corp., a cattle company, agreed to a deal to sell 6,600 acres of land in Fulton County, Illinois to an organization that wanted to turn the land into a natural preserve. As part of the deal, the cattle company promised to ensure the land was free from any toxins or chemicals and to clean up any trash on the property. The total price of the deal was $16.35 million.

There were no issues until 2006, when the Nature Conservancy found there was petroleum on part of the site. The organization sued the cattle company for breach of warranty and a judge ruled in favor of the organization, forcing the cattle company to dish out $800,000, even though the cattle company claimed it wasn't aware of any problems. It appealed and lost.

In an effort to pass the buck, the cattle company sued a local drainage district that stored petroleum in tanks near the property. The company attempted to argue that the district was responsible for the contamination and should have to pay the damage.

A court found in favor of the drainage district and the 7th Circuit Court of Appeals recent affirmed the ruling, writing that a "blameless contract breaker...cannot invoke non-contractual indemnity to shift the risk that he assumed in the contract."

Experts said the ruling wasn't hard for the appeals court because the drainage district had no part in the contract. It was the cattle company's responsibility to ensure the property was free from environmental issues, per its contract.

Analysts believe that the ruling is significant for two reasons. For one, it shows the importance of strongly worded contracts that allow for no loopholes that could potentially harm a company doing business with another company or an individual. Secondly, it shows that companies must do their research of potential environmental hazards when purchasing a property.

Just as future home buyers must ensure the property is properly inspected not only for structural issues, but also potential toxins, a company planning to purchase a piece of land must make sure there aren't any environmental issues or local ordinances that would make the property unusable for the company's purpose.

Our Chicago business lawyers have experience handling these environmental issues as they relate to local, state and federal environmental laws and the potential hazards for companies looking to purchase land. It's not as simple as buying a property and starting construction.

Along with the frustrations of local government permitting, there are also bigger environmental issues that must be taken into consideration. Rushing through the process without an experienced Chicago business lawyer can make it much more expensive and time consuming.

Jeremy A. Gibson & Associates is a law firm dedicated to business litigation in Chicago and elsewhere in Illinois. Call 877-452-4529 for a free consultation.