Conditions

Question 1

Once all Conditions are either satisfied or excused, what duty are both parties under?

Answer 1

They must perform, discharge their duty, or be in breach.

Question 2

What is a Condition?

Answer 2

A condition is an act or event, other than a lapse of time, that affects a duty to render a promised performance that is specified in a contract.

It is an uncertain event that must occur before a party can be required to perform.

A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.

It is an event that determines if and when a duty either arises or is extinguished. An event that, if it occurs, triggers certain obligations or rights.

Question 3

Within Conditions, is there a difference between the words Promise, Covenant and Duty?

Answer 3

No, they mean the same thing

Question 4

What is a Promise?

Answer 4

A commitment to do (or refrain) from doing something.

Question 5

What are the four ways to determine if something is a Promise vs. a Condition?

Answer 5

Look to the 1) intent of the parties 2) language 3) prior dealings between parties 4) industry/business custom

Question 6

In doubtful situations, do courts prefer a Promise or a Condition? How would the courts decide whether there was a Promise or a Condition?

Answer 6

A promise. Because a breach of promise will not result in a forfeiture of rights.

The first step, therefore, in interpreting an expression in a contract, with respect to condition as opposed to promise, is to ask oneself the question: Was this expression intended to be an assurance by one party to the other that some performance by the first would be rendered in the future and that the other could rely upon it? If the answer is yes, we have found the expression to be a promise that the specified performance will take place.

The alternative question to be asked is: Was this expression intended to make the duty of one party conditional and dependent upon some performance by the other (or on some other fact or event)? If the answer to this question is yes, we have found that the specified performance is a condition of duty, but we have not found that anyone has promised that the performance will take place.

Question 7

Can a Condition for one party be a Promise for another party and/or the same party?

Answer 7

Yes

Question 8

Is the passage of time a Condition?

Answer 8

No

Question 9

Why is the passage of time not a Condition?

Answer 9

Time references tied to events are generally interpreted not as conditional events but merely placing performance within a particular time frame.

Question 10

What are the three classifications of Conditions?

Answer 10

Precedent, Concurrent, and Subsequent

Question 11

What is a Condition Precedent?

Answer 11

A condition that must occur before a duty arises. Typically the words “if” will be used.

A condition precedent is an event which must take place before a party to a contract must perform or do their part. For example, you agree to paint a house IF the owner of the house supplies the paint. Until the paint is supplied, you’re not required to paint.

If a condition precedent does not occur, no duty of performance arises and no payment is required. Furthermore, the party protected by the condition is not in breach when that party does not perform his or her part of the contract.

Question 12

What is a Condition Concurrent?

Answer 12

Both parties have a Condition Precedent to each other.

A condition concurrent is something that must occur simultaneously with another condition. Each party’s obligation acts as a condition precedent for the other. When there is a condition concurrent, the parties’ obligations are mutually dependent on each other. Neither party has an obligation until the other party performs his or her obligation.

For example, let’s say that I make an oral agreement with my brother. As long as he cleans my room every week, I’ll wash the dog every week. This is a condition concurrent because we are mutually obligated to one another and our obligations are mutually dependent on each other. As long as he’s cleaning my room, I’m obligated to wash the dog. As long as I’m washing the dog, he’s obligated to clean my room.

This is a common contract condition in the sale of goods or services. When I buy a new shirt in a store, I’m obligated to pay the storekeeper and she’s obligated to give me the shirt.

Question 13

What is a Condition Subsequent?

Answer 13

There is already a duty to perform but a subsequent condition occurs and now the duty to perform is extinguished. It is “an event that terminates a duty”. Typically the word “unless” will be used.

A condition subsequent is an event or state of affairs that, if it occurs, will terminate one party’s obligation to the other.

For example, a contract might state something like: the client will pay for the haircut, unless the hairdresser does not perform the haircut. In this case, the client has a contractual duty to pay for the haircut, and this obligation will only end if the hairdresser does not perform. In other words, in order to prove that they are no longer bound, the client must prove that the haircut never occurred.

Question 14

What are the three ways a Condition comes into existence?

Answer 14

Express, Implied, Constructive

Question 15

What is an Express Condition?

Answer 15

A Condition that is expressed by the parties.

It is an explicitly stated event that must occur before a party is subject to a particular obligation or liability.

Question 16

What is an Implied Condition?

Answer 16

A Condition that is implied by the facts as to how the parties intended to deal with each other.

An implied condition is one which is not expressly mentioned but is imputed by law from the nature of the transaction or the conduct of the parties to have been tacitly understood between them as a part of the agreement.

Question 17

What is a Constructive Condition?

Answer 17

A Condition that is implied by the court as to how the parties must deal with each other.

A condition that is not explicitly expressed like an express condition, but that is imposed by the court to avoid injustice.

Question 18

What are the two types of a Party’s Satisfaction of Conditions?

Answer 18

1) A party’s satisfaction based on personal taste or judgement 2) satisfaction based on mechanical fitness, utility, or marketability

Question 19

What are the important elements of a Condition of personal satisfaction?

Answer 19

Requires the designated person’s personal satisfaction. Failure to be satisfied, even if not reasonable, is valid as long as that failure of satisfaction is in good faith. Satisfaction of the person is subjective and not objective.

Question 20

What is the difference between a party’s personal satisfaction and a party’s satisfaction based on mechanical fitness, utility, or marketability?

Answer 20

Mechanical fitness requires a reasonable person’s satisfaction (is objective).

Question 21

What are the three ways a Condition can be satisfied?

Answer 21

1) Full performance 2) Substantial Performance 3) Doctrine of Divisibility

Question 22

What is Full Performance?

Answer 22

Full performance of the contract

Question 23

What is Substantial Performance?

Answer 23

When performance meets the essential purpose of the contract.

Substantial performance is a contract law doctrine that allows parties to be paid under a contract and to retain the benefit of a contract even if they technically failed to comply with the precise terms of the agreement. In other words, substantial performance, while it is not full and complete performance, is sometimes enough to satisfy an agreement—so long as a good faith attempt at performance was made and the deviation does not amount to a material breach of the agreement.

The failure to comply strictly with the terms of a condition will not prevent recovery if there has been substantial performance of the contractual obligation. Courts created this doctrine in order to prevent forfeitures and to ensure justice. Where recovery is permitted for substantial performance, it is offset by damages for injuries caused by failure to render complete performance. Courts determine whether there has been a breach or a substantial performance of a contract by evaluating the purpose to be served; the excuse for deviation from the letter of the contract; and the cruelty of enforced adherence to the contract.

Question 24

Will Substanital Performance ever satisfy an Express Condition?

Answer 24

No. Where there has been an express condition, anything less than full performance will never satisfy that condition.

Question 25

What is the “damage offset” allowed by Courts under Substantial Performance?

Answer 25

If a party has Substantially Performed, and has satisfied a Condition Precedent, then the performance of the breaching party can be offset by damages.

Where recovery is permitted for substantial performance, it is offset by damages for injuries caused by failure to render complete performance.

Question 26

What are the three elements of the Doctrine of Divisibility?

Answer 26

Type of contract in which each party’s obligations are independent of those of the other, and each party can demand performance from the other without performing its own part.

1) performance of each party is divided into multiple parts 2) the number of parts due from each party is the same 3) the performance of each part by one party is equivalent to the corresponding part of the other party.

Question 27

What are the six types of Excuse of Condition?

Answer 27

1) Failure to cooperate or use good faith effort 2) Prospective inability to perform 3) Anticipatory repudiation 4) Impossibility 5) Waiver and estoppel 6) Election

Question 28

Under Excuse of Condition, what is ‘Failure to cooperate or use good faith”?

Answer 28

A party’s failure to cooperate or use a good faith effort so that a Condition cannot be met. If this occurs, the Condition is excused and the “bad faith” party has a duty to perform.

Question 29

Under Excuse of Condition, what is “Prospective inability to perform”?

Answer 29

If one party reasonably believes that the other party is not going to perform, the Condition is excused.

Question 30

Under Excuse of Condition, what is Anticipatory Repudiation?

Answer 30

If one party unequivocally communicates to the other party that they are not going to perform when performance is due, the Condition is excused.

Question 31

Under Excuse of Condition, what is Impossibility?

Answer 31

If a Condition becomes impossible to perform, the Condition is excused.

Question 32

Under Excuse of Condition, what is Waiver and Estoppel?

Answer 32

If there is a Waiver of a Condition and subsequent Estoppel (Reliance) on that waiver, the Condition will be excused.

Question 33

Under Excuse of Condition, what is an Election?

Answer 33

If there is a waiver of a Condition after the time for occurrence of the Condition, the Waiver cannot be retracted, even in the absence of reliance.

Question 34

Under Excuse of Condition, what is relief “outside the contract”?

Answer 34

If one party has performed - usually partially - and an unsatisfied or unexcused Condition prevents performance from the other party, relief for the performing party may be found by quasi-contract or unjust enrichment.

Question 35

What is the difference between a Promise and a Condition?

Answer 35

A breach of promise or contract gives rise to a claim for damages. The occurrence or nonoccurence of a condition either gives rise to a duty to perform or discharges a duty to perform. Liability for breach of contract applies to breaches of promises and not to failures of a condition.

A failure of condition, however, can also lead to a breach of promise or contract if the promisee has promised to or undertaken a duty to perform the condition.