It sounds like your friend likely breached the agreement by failing to produce the inspection to create the Base Line Condition. There can't be agreement (or failure to agree) on a base line if one was never produced to then negotiate. I don't think there is a successful argument for termination without breach here.
Your friend should seek legal counsel to review the agreement and advise him of his options.
Answers and information posted on AVVO by Amy Pivetta Hoffman do not create an attorney-client relationship and are for general information purposes only.