Flashcards in Page 34 Deck (31):
What is a promise?
Undertaking to perform or refrain from doing a designated act
What is an independent or unconditional promise?
One that is unqualified, and nothing but the lapse of time makes it enforceable
Does an independent or unconditional promise have to be performed even if the other party hasn't performed?
If A promises to build a house for B, who will pay when the house is finished, what must A do?
He must perform before B is required to do anything, if he materially breaches, he can cancel and sue even though he hasn't performed if he proves he was ready, willing, and able to pay
Can repudiation from either party relieve an independent promise of duty to perform?
Why are few promises independent?
Because it is presumed A promise isn't intended to be independent unless it clearly says so
Example of an independent promise in a lease agreement?
Tenant agrees to pay rent, and landlord agrees to make repairs. T still owes a duty even if the landlord doesn't perform (but if LL's nonperformance is extreme, it can make a constructive eviction that allows T to cancel the lease
If separate contracts are entered by the same parties at the same time, and breach of one happens, what happens to the other?
It still stands and is not affected by the other breach
What is a mutually dependent promise?
When parties intend performance of one to be conditioned on performance by the other
What are the three types of conditions?
Precedent, concurrent, subsequent
What is a condition precedent?
An act or event, other than lapse of time, that must exist or occur before a duty to perform is triggered
What does a condition precedent trigger?
If a condition precedent is never met, what happens?
The duty is never triggered (duty didn't disappear, it just wasn't triggered)
Example of a condition precedent?
"I will buy your autographed baseball if your team wins the game" (unless and until the team wins, there's no obligation to buy the ball, and if the team doesn't win, the condition failed)
Who has the burden of proof for a condition precedent?
How can a condition precedent be excused?
If wrongful conduct of a party prevents it from happening
A performance that requires time to accomplish is a condition precedent to what?
The promised performance of a single act of payment
What is a condition concurrent?
An event must simultaneously occur at the moment duty is being performed (performance exchanged at the same time)
For a condition concurrent, neither party can put the other in breach for failure to perform without what?
A tender: readiness and willingness to perform with present ability to do so, and notice to the other party
Example of the condition concurrent?
I will sell you my laptop and you will give me $1000, and we will exchange them at the same time
What is a condition subsequent?
Any event that discharges/terminates a duty of performance that has already arisen
What is an example of a condition subsequent?
S agrees to work for P for a month unless He is accepted to law school. His duty stays subject to the conditions subsequent that he is not admitted
When do you often see condition subsequents?
In insurance policies (Company will pay for a theft, but only if after the theft happens and the duty to pay matures, proper reports are submitted). Theft and the filing of the report are both conditions precedent to the company's performance of its promise to pay (if both conditions are fulfilled, company must pay or be in breach)
What is a tricky situation for conditions subsequent?
Often conditions are worded like they are subsequent, but they are actually precedent. Ie: Insurance company insures you against fire by saying their liability is discharged if you don't send a report within 30 days or Sue within a year. Actually precedent because the duty doesn't arise unless report is filed within 30 days, the other is a real condition subsequent because if suit is brought within a year, the duty is discharged
Who has the burden of proof for a condition subsequent?
The party claiming a duty has arisen and been discharged
If a clause says payment is conditioned on an event happening, and literal interpretation of that would result in forfeiture, what do courts do?
Construe the condition to just be a guide for the time for payment, and not absolute that must happen before payment
If you contract to pay someone $20,000 to do electrical work to be paid when you sell the building for profit, and they complete the work, but you don't make a profit, what will the courts do?
Instead of allowing a forfeiture, courts say that sale condition was just identifying a reasonable time for payment so you still have a duty to pay
If a general contractor doesn't pay a subcontractor because he hasn't gotten the money from the owner, what are the two situations that creates?
- Express condition: if contract clearly says subcontractor will be paid through owner, then he isn't yet entitled to payment because condition not met
- language of time: language isn't the condition, just a convenient time to pay, so general contractor's obligation stands to pay within a reasonable time
How does the solvency of an owner relate to the general contractor?
It is a credit risk incurred by him
What are the different ways a condition arises?
Express condition, constructive condition