Chapter 5: The Maturing and Breach of Contract Duties
Section 1: The Effects of Express Conditions
I. Condition Precedent
A. Condition means some operative fact subsequent to accept upon which the rights and duties of the parties dependence and prior to discharge, a fact
1. In a contract the term condition is more properly restricted to facts subsequent to acceptance and prior to charge
2. The purpose of constituting some fact as a condition is always the postponement of an instant duty
3. The fulfillment of a promise discharges a duty
4. The occurrence of a condition creates a duty
B. Non-fulfillment of a promise is called a breach of contract, and creates in the other party a…right to damage
C. Glaholm v. Hays
1. Facts: parties contracted for the delivery of goods with specific requirements on delivery and departure. The vessel did not depart as contracted to do so and as a result the defendant refused to accept the vessel and therefore the plaintiff sued.
2. Holding: Both parties were aware that the whole success of a mercantile adventure does, in ordinary cases, depend upon the commencement of the voyage on time. Construing the words as a condition precedent will therefore effectuate the parties’ intention better than finding them merely words of promise.
D. Howard v. Federal Crop ins. Corp.
1. Facts: Federal Crop Insurance Corp. (FCIC) claimed that Howard’s violation of a condition precedent negated its obligation to pay
2. Rule of Law: Where it is doubtful whether words create a promise or an express condition, they are usually interpreted as creating a promise, thereby avoiding a forfeiture.
i. Express Condition-A condition that is expressly stated in the terms of a written instrument
ii. Condition Precedent-The happening of an uncertain occurrence, which is necessary before a particular right or interest may be obtained or an action performed
iii. Promise-The expression of an intention to act, or forbear from acting, granting a right to the promise to expect and enforce its performance
4. Points of Interest
i. General legal policy opposed to forfeitures-when it is doubtful whether words create a promise or a condition precedent, they will be construed as creating a promise.
ii. Restatement second of Contract §261-Interpretation of doubtful words as promise or condition
a. Where it is doubtful whether words create a promise or an express condition they are interpreted as creating a promise; but the same words may sometimes mean that one party promises a performance and that the other party’s promise is conditional that performance
E. Merritt Hill Vineyards, Inc. v. Windy Heights Vinyard, Inc.
1. Facts: At closing on property the plaintiff discovers that title insurance and mortgage confirmation statement and when they requested their deposit back the defendant refused and they sued for money back as well as damages
2. Holding: A condition is an event, not certain to occur, which must
rs, will bring something else to an end; an event the existence of which, by agreement of the parties, discharges a duty of performance that has arisen.
v. Concurrent Condition-A condition that must occur or be performed at the same time as another condition, the performance by each party separately operating as a condition precedent; a condition that is mutually dependent on another, arising when the parties to a contract agree to exchange performances simultaneously.
2. Restatement first of Contract
a. In the Restatement of this Subject a “condition” is according as the context indicates, either a fact (other than mere lapse of time) which, unless excused. . .
1) must exist or occur before a duty of immediate performance of a promise arises, in which case the condition is a “condition precedent,” or
2) will extinguish a duty to make compensation for breach of contract after the breach has occurred, in which case the condition is a “condition subsequent,” or a term in a promise providing that a fact shall have such an effect.
§224-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.