Contractual Interpretation

Question 1

Acme Markets, Inc. v. Federal Armored Express, Inc.

Answer 1

Under Pennsylvania law, a party may avoid forfeiture based on nonoccurrence of a condition precedent if the forfeiture would be disproportionate and the condition was not a material part of the contract.

one of three ways to ameloriate the harshness of older con. interp. meth

Question 2

Cox v. SNAP, Inc.

Answer 2

If a promisor prevents or hinders fulfillment of a condition to his or her performance, the condition can be waived or excused.

Question 3

Parrish v. Wightman

Answer 3

Where contract performance is based on the occurrence of a future event there is an implied agreement that the promisor will place no obstacle in the way of the happening of such event, particularly where it is dependent un whole or in part on his own act, and, where he prevents the fulfillment of a condition precedent or its performance by the adverse party, he cannot reply on such conditions to defeat his liability.

Question 4

What is a condition precedent?

Answer 4

A condition which must occur before a duty to perform under a contract arises.

Question 5

What happens when a court followes Restatement § 229

Answer 5

When following § 229 the non-occurrence of a condition precedent can be excused if it would cause a disproportionate forfeiture.

Question 6

Restatement (Second) of Contracts § 229 Excuse of a Condition to Avoid Forfeiture

Answer 6

To the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange.

Question 7

What is the course of performance?

Answer 7

A sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

Question 8

What is a usage of trade

Answer 8

“usage of trade” is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

Question 9

U.C.C. 1-303 Course of Performance, Course of Dealing, and Usage of Trade.

Answer 9

Defines terms in the name.

Generally this is meant to ensure that intended terms become enforceable as well as supplement and cure ambiguity or absence of relevant terms but all of this is overwhelmed if a specific term is written out in the contract

Question 10

Restatement (Second) of Contracts § 222(1)

Answer 10

A usage of trade is a usage having such regularity of observation in a place, vocation, or trade as to justify an expectation that it will be observed with respect to a particular agreement. It may include a system of rules regularly observed even through particular rules are changed from time to time.

Question 11

Convention on the International Sale of Goods

Answer 11

The parties are bound by any usages to which they have agreed and by any practices which they have established between themselves

The parties are considered unless otherwise agreed, to have implied made applicable to their contracts or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to and regularly observed by parties to contracts of the type involved in the particular trade concerned.

Question 12

Wood v. Lucy, Lady Duff-Gordon

Answer 12

A contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract.

A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

Question 13

Some reasons for implying terms

Answer 13

Forgotten terms (uncommon)

Achieve substantial justice whatever that ultimately means

Supply terms that the parties would have agreed to had they thought about the matter

Implied terms can be added as a matter of public policy or because of empiricism aka what society views as the standard terms or views of other people in similar situations

Question 14

What is a pay-when-paid provision?

Answer 14

Pay-when-paid provision in a subcontract merely acts as a schedule of payment and not a condition precedent for payment.

Question 15

What is a paid-if provision

Answer 15

A pay-if-paid provision does not state explicitly enough that the parties intended to create a condition precedent.

Question 16

Restatement (Second) of Contracts § 227

Answer 16

Standards of Preference with Regard to Conditions

(1) In resolving doubts as to whether an event is made a condition of an obligor’s duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee’s risk of forfeiture, unless the event is within the obligee’s control or the circumstances indicate that he has assumed the risk.

(2) Unless the contract is of a type under which only one party generally undertakes duties, when it is doubtful whether:

(A) a duty is imposed on an obligee that an event occur, or

(B) the event is made a condition of the obligor’s duty, or

(C) the event is made a condition of the obligor’s duty and a duty is imposed on the obligee that the event occur, the first interpretation is preferred if the event is within the obligee’s control.

(3) In case of doubt, an interpretation under which an event is a condition of an obligor’s duty is preferred over an interpretation under which the non-occurrence of the event is a ground for discharge of that duty after it has become a duty to perform.