A group of people led by Pfau (defendants) jointly agreed to purchase 286 acres from Western Hills, Oregon, Ltd. (Western Hills) (plaintiff), with the intention of creating a planned development on the site. The closing of the transaction was conditioned on defendants receiving city approval for a development satisfactory to defendants. When they entered into the contract, defendants were aware that city sewage facilities would not be available for use by the development, thereby requiring them to construct private sewage facilities at a substantial expense. Defendants submitted a proposal for their development to the city and received no indication that it would be denied. They abandoned the project, however, because of the costs associated with installing private sewage. When defendants refused to purchase the property Western Hills sued for specific performance. The trial court found in favor of Western Hills, and defendants appealed.