Conditions and Self-Help Remedies During Performance

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  1. Conditions and Self-Help Remedies During Performance
    1. Introduction
      1. Conditions (Rst. 2d, 224; Prof points out this section; we must be able to distinguish a promise from a condition, and to identify the self-help remedies that are available for the beneficiary of the condition): “An event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.”
        1. A condition is something attached to an agreement, the occurrence of which will trigger the performance of a legal obligation. A condition is not a promise. Failure to meet a condition is not a breach.
        2. A condition precedent is a fact which must exist or occur before a duty of immediate performance of a promise arises. The party to whom a duty is owed must prove the occurrence in order to compel the other party to perform.
        3. A condition subsequent is a fact which will extinguish a duty to make compensation for a breach of contract after the breach has occurred.
        4. A concurrent condition is a condition precedent which exists only when parties to a contact are found to render performance at the same time. The party owing the duty must prove the condition has occurred to discharge the duty.
      2. Conditions v. Promises (Rst. 2d, 227(1)) (Prof. also notes this section; we don’t want forfeiture): “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.”
        1. Subsec (2) goes on to indicate a general preference for interpreting ambiguous language as a promise, rather than as a condition or both a condition and a promise.
        2. Waiver of express condition: Rst. 2d, 84(1) (Prof. points out the waiver provision)

Condition

Promise

Upon not meeting the condition, the duty is discharged

Upon not performing the promise, then

          • total breach: the duty is discharged.
          • material breach: the duty is performed, but there are damages recoverable.
      1. The non-occurrence of a condition is important precisely because of the rights that it gives to the beneficiary of the condition. These rights are self-help remedies and they are present in every case involving conditions. They include:
        1. Suspension of performance
        2. Cancellation of the contract
        3. Rejection of goods
        4. Revocation of acceptance of goods
      2. Whether a buyer of goods has a right to reject or to revoke acceptance on the seller’s failure to deliver conforming goods is determined by a set of complex rules in 2-601 thru 2-608 in the UCC.
        1. UCC: In contracts for the sale of goods, there is no “materiality” requirement for rejection (except in installment contracts, 2-612) or for cancellation thereafter (2-601, 2-711).
        2. If the buyer has accepted goods, he can revoke acceptance only if the defect “substantially impairs” them (i.e., if the goods are “materially” defective).
        3. Otherwise, the rights of buyers and sellers of goods (in 2-703, 2-711) do not condition cancellation on the materiality of the breach (except with regard to installment contracts and revocation of acceptance, as mentioned above).
      3. There are express conditions and implied (or constructive) conditions
        1. Implied conditions: The English courts began to “construct”–to imply into the contract–a condition that any major failure by one party, any “material breach,” gave the other the right to suspend and eventually, to cancel.
          1. While courts were at it, they found other conditions by implication–namely the right to stop performance without breaking the contract when its performance became “impossible” or “impracticable” or its purpose was “frustrated.”