On January 2, Hugh Homey and Sue Structo entered into a written contract in which Structo agreed to build on Homey's lot a new house for Homey, according to plans and specifications furnished by Homey's architect, Barbara Bilevel, at a contract price of $200,000. The contract provided for specified progress payments and a final payment of $40,000 upon Homey's acceptance of the house and issuance of a certificate of final approval by the architect. Further, under a "liquidated damages" clause in the agreement, Structo promised to pay Homey $500 for each day's delay in completing the house after the following October 1. Homey, however, told Structo on January 2, before the contract was signed, that he would be on an around-the-world vacation trip most of the summer and fall and would not return to occupy the house until November 1."For this question only, assume the following facts. Structo completed the house on October 14 and, when Homey returned on November 1, requested the final payment of $40,000 and issuance of a certificate of final approval by the architect, Bilevel. Homey, however, refused to pay any part of the final installment after Bilevel told him, "Structo did a great job and I find no defects worth mentioning; but Structo's contract price was at least $40,000 too high, especially in view of the big drop in housing values within the past 10 months. I will withhold the final certificate, and you just hold on to your money." If Structo sues Homey for the $40,000 final payment after Bilevel's refusal to issue a final certificate, which of the following will the court probably decide?
Structo wins, because nonoccurrence of the condition requiring Bilevel's certificate of final approval was excused by Bilevel's bad-faith refusal to issue the certificate.  Structo wins, but, because all contractual conditions have not occurred, her recovery is limited to restitution of the benefit conferred on Homey, minus progress payments already received.  Homey wins, provided he can prove by clear and convincing evidence that the fair market value of the completed house is $160,000 or less.  Homey wins, provided he can prove by clear and convincing evidence that total payments to Structo of $160,000 will yield a fair net profit. 