11. Conditions

Question 1

What are examples of promises (most courts assume)?

Answer 1

Commitment to do/not do

‘Promise’/’Agree’/’When’ (not within Obligee’s control)

Question 2

What are examples of conditions?

Answer 2

Event/State of world which must occur/not occur

• Before duty to perform
• Releasing duty to perform

‘If’/’Provided’/’When’ (within Obligee’s control)

Question 3

What is the difference between a promise and a condition?

Answer 3

Promise

• Bound under duty to perform
• Failure => Breach

Condition

• Bound under duty to perform once condition occurs
• Failure => Release from duty to perform

Question 4

What factors may courts consider to determine whether a promise or condition is present?

Answer 4

Parties’ use of words/phrases

Parties’ previous works

Any TP performance required

Related custom in business community

Question 5

What type of conditions are there?

Answer 5

Condition precedent
- Event must occur ‘before’ duty to perform arises

Condition concurrent

• Events occur ‘together’ => Both parties bound to perform at same time
• Events are CP to each other

Condition subsequent
- Event cuts off duty to perform

Question 6

How should condition satisfactions be determined?

Answer 6

Objective standard: Reasonable person’s satisfaction
- Mechanical fitness/utility/marketability

Subjective standard: Promisor’s satisfaction (good faith)
- Aesthetic taste/judgment

Question 7

What limitations are there towards express conditions?

Answer 7

NOT to benefit/protect only ONE of the parties

Question 8

What are the types of constructive (implied) conditions?

Answer 8

Of performance
- Party to tender performance

Order of performance

• Possible concurrent performance
• Longer performance precedent to shorter performance

Of cooperation
- Party to cooperate if other party tenders performance

Of notice
- Party to notify other party when performance is due

Question 9

How can a party recover equitable damages (unjust enrichment theory)?

Answer 9

1) One party satisfies/fails condition => Contract not enforceable
2) Other party fully/partially performs

(Damages could be LESS than contract price)

Question 10

What extent of compliance with conditions is required to activate duty to perform?

Answer 10

Express conditions
- Strict compliance

Implied conditions

• Strict compliance
• Substantial compliance (activates duty to perform BUT also can reduce damages)

Question 11

How can conditions be determined in substance or form?

Answer 11

Form
- Interpretation NOT as part of contract (on its own)

Substance
- Interpretation as part of contract