Conditions

Question 1

Condition

Answer 1

Some operative fact - between acceptance and discharge of the contract - on which the rights and duties of the parties depend

Question 2

Important distinction between condition and promise

Answer 2

If condition, then the other party’s performance depends on the condition being met, so failure to do so can result in forfeiture

However, if promise, then failure to perform simply results in damages.

Question 3

Condition Analysis

Answer 3

Analysis

(1) Is there an express condition?
(2) Is there an exception to the express condition (waiver, excuse)?
(3) Is there an implied condition?
(4) If so, does the implied condition require perfect performance?

Question 4

Express Conditions

Rule:

Answer 4

Express conditions must be completely/perfectly complied with.

• If party does not completely comply with condition, he forfeits his right to the return performance.
• Courts hate express conditions because of the requirement of strict performance and the harshness that goes along with forfeiture…will go out of their way to construe clauses as establishing anything other than express condition.

Question 5

Rules when interpreting Conditions

Answer 5

1. Construe against forfeiture
2. Construe against drafter
3. If ambiguous, construe promise over condition.
4. In order for express condition to be created, there needs to be clear and definite language –> don’t give the court any chance to construe it otherwise.

Question 6

Intent to create a condition must be expressed _______ and ________.

Answer 6

Intent to create a condition must be expressed clearly and unambiguously

• Better use some magic words (if, subject to, upon, etc)
• Chirichella: Closing on sale of a home was supposed to “coincide with settlement of the new home approx. Oct. ‘71”…court said this did not create condition, it merely gave a time period around when closing was supposed to happen.
• If the court doesn’t find clear and unambiguous condition, it is simply a promise

Question 7

If a party takes action inconsistent with the contract, it may constitute ______________.

Answer 7

If a party takes action inconsistent with the contract, it may constitute a waiver of the right to enforce the condition

Question 8

A waiver is

Answer 8

Waiver is:

• *1. Voluntary
  2. Relinquishment
  3. Of a known right or advantage. **

Question 9

Court will not imply waiver of a condition; the waiver must be _____.

Answer 9

Court will not imply waiver of a condition; the waiver must be express.

Court looks to words/actions of the party inconsistent with enforcement of the condition.
Clark v. West: Guy was writing a book and was gonna get paid $6 per page if he stayed sober…his boss saw him drinking/knew he was drinking and told him they were still gonna pay him the $6 per page…therefore, he waives his right to claim that drunky breached the condition.

Question 10

**Clark v. West **

(author not supposed to drink)

Answer 10

Guy was writing a book and was gonna get paid $6 per page if he stayed sober…his boss saw him drinking/knew he was drinking and told him they were still gonna pay him the $6 per page…therefore, he waives his right to claim that drunky breached the condition

Question 11

Excuse Doctrine

Answer 11

Even if a party has violated an express condition, the court may use its power in equity to excuse the breach of the condition where:

1. Good faith breach
2. Fault can’t be more than negligence
3. Substantial investment/improvements made in g.f. and for the benefit of the biz
4. No prejudice to the party seeking to enforce the breach
5. Substantial forfeiture would occur if the condition was not excused.

Question 12

Constructive Conditions

Answer 12

Constructive Conditions = Implied Conditions

Conditions that are not expressed in the contract…implied from the reflected intent of the parties.

• implied to resolve a dispute even though not in the K

Question 14

2 Common Dispute Topics for Implied Conditions

Answer 14

Two Common Dispute Topics for Implied Conditions

• *(1) Order of Performance
  (2) Quality of Performance**

Question 15

3 kinds of relationships between promises

Answer 15

1. Independent & mutual
2. Conditioned & Dependent –> performance of one depends on performance of the other.
3. Mutual & concurrent (Reciprocal) performance of both parties happens simultaneously.

Question 16

Order of Performance

General Rule:

Answer 16

The performance that takes some time to complete is intended to be performed first (I have to paint the house before you pay me the money.)

Courts often have to imply the order of performance from the intent of the parties as reflected by the agreement.
Reciprocal Promises typically occur in the context of the sale of goods: in order to trigger the obligation of the other party to perform (and claim they breached), the party must show that he had performed or was ready to perform his part of the contract.

Question 17

Doctrine of Substantial Performance

Answer 17

Implied condition that the obligation of a party to perform is triggered by the substantial performance of the other.

If the court has implied a conditional order of performance, it is not going to require perfect performance before the return obligation is triggeredà substantial performance is enough.
However, to receive the doctrine of performance, you have to earn it (3 factors)

Question 18

3 Factors for Substantial Performance

Answer 18

(you have to earn it!) Substantial performance IS failing to perform

(1) Frustration of the purpose of the contract: if breach does not frustrate the purpose, performance seems more substantial.
(2) Culpability/excuse for deviation: inadvertent mistake vs. willful. At most negligent.
(3) Disproportionality (completed performance vs. forfeiture): have to demonstrate that making you live up to your promise/condition would be cruel –> big disparity, show that other party is merely inconvenienced

Question 19

Kingston v Preston

(indentured servant to earn right to own business)

Answer 19

F: Indentured servant to learn the business. Partnership with nephew for capital ($$$). Monthly payment on silk stock until only 4,000lbs of silk left, Seller said can’t have keys to shop until give collateral, says buyer breached