Law School Resources
Performance and breach of contract
A promisor is in breach if
they have an absolute duty to perform and they do
not. To determine if there is an absolute duty to perform you must
consider the type and legal effect of conditions in a
contract. If the duty is only a conditional one the
promisor is bound only after the contingency has
Conditions Precedent, Concurrent, and Subsequent
- Conditions precedent. A condition
precedent is one that must occur in order to create an absolute
duty of performance.
- Conditions concurrent. Conditions
concurrent are mutually dependant performances capable of nearly
simultaneous execution. The contract bind the parties to render
performance at the same time, such as in an ordinary sales
contract, in which payment and delivery are conditions
concurrent; the conditions of payment must occur before the duty
to delivery arises and, the conduction of delivery must occur
before the duty of payment arises.
- Legal effect: the legal effect of
a conduction concurrent is much the same as a conduction
precedent. If the conditions occurs the other party’s duty to
perform arises; if it does not occur the duty to perform does
- Conditions Subsequent. A
conditions subsequent is one in which the occurrence of the
conduction extinguishes a previously absolute duty to perform;
An emplacement contract in which A agrees to work for B for a
specified period of time unless A is called military service.
- Legal effect: Occurrence of the
conduction subsequent extinguishes the other party’s absolute
duty to perform.
- True conditions subsequent vs.
conditions subsequent in form only: The previous example is
a true conduction subsequent. These are rear and generally
frowned upon by the courts. Provisions that are worded as
conditions subsequent but are really conditions precedent
in effect must be distinguished. Fro example, I insures P
against loss by fire ad the policy is discharged if either (i)
proof of loss is not submitted within 30 days after the
accident, or (ii) suit in not brought against insurer for the
claimed loss within 12 months from the date of the accident.
- Submitting notice and proof of loss
within 30 days is really a conduction precedent to the
insurer’s duty to pay.
- But failure to sue within the 12 month
period is a true condition subsequent, which extinguishes the
company’s duty to perform, (payment.)
Conditions and Covenants Distinguished.
Provision may be both conditions and
- Covenants. A covenant is an
absolute, unconditional promise to perform, (or refrain from
performing,) some act. ( i. e. an contractual promise to which
no conditions are attached). A failure to perform a covenant is
always a breach of contract per se.
- Conditions. A conditions is an fact
of event , that happening or nonhappening of which creates
or extinguishes a duty to perform on the art of the
promisor. Failure of that which is merely a conduction is
not a breach of contract.
- Conditions are of importance primarily
in bilateral contracts. A unilateral contract leaves all the
executory duties on the promisor.
Interpretation of doubtful provisions as conditions or
- Parties’ intent controls: Ordinary
the words used by the parties will indicate their intent.
- Where parties’ intent is unclear:
The ultimate test is the intention of the parties and thus each
case must be decided on own facts. However, the following
factors are usually determinatives of the parties’ intent:
- Words Used. Words such as
‘provided”, “if’, “when”, etc., usually indicate that a
conduction rather than a covenant was intended. Word such as
“promise” or “agree”, etc., generally indicate a covenant.
- Custom: Business custom in the
community with regard to such contracts.
- Which interpretation best protects
the expectancies of the parties: This is by far the most
important factor to consider because the fundamental test is
to determined the intentions of the parties.
Effect: this means that doubtful provisions will
ordinary be interpreted as covenants, rather than conditions.
Rational: This is to uphold the contract and
preserve the expectances of the parties, since failure to perform
a promise will entitle the other party to damages whereas failure
of a conduction excuses the duty of counter-performance but other
wise imposes no liability.
Burden of proof that a condition has been satisfied:
Introduction: The procedural distinction between
condition precedent ( conditions that must be satisfied in order
to create a duty to perform) and conditions subsequent (
conditions that excuse an absolute duty to perform) is vital.
Procedural effect of a condition subsequent: Although
the burden of allegation and proof of the happening of all
conditions precedent is upon the plaintiff-promisee, the burden of
allegation and proof of the occurrence of a condition subsequent
(or condition subsequent in form) is generally on the
Affirmative defense: Thus, any time the contractual
provision is worded so that it appears to, or actually does,
extinguish as hitherto absolute duty of performance, the
occurrence of the condition is an affirmative defense for the
promisor, (i.e., he must plead and prove the he was no
longer under a duty to perform because of the occurrence).
Implied conditions and the order of performance
- Implied-in-fact Conditions: These
are conditions that the parties would have agreed to if they had
thought about. The law will imply whatever conditions are
inherent in and necessary to the promises given to the
performance of the contract. These are called “necessary
conditions” and conditions of “good faith and cooperation.”
- Test for implied-in-fact conditions:
Would a reason person feel that the parties had contracted
with the understanding, even thou not expressly stated, that
the certain facts would exist?
Example: Loading dock --
- Implied conditions of good faith:
An extremely important ‘implied-in-fact” condition in most
contracts is that neither party will act in bad faith so as to
hinder or prevent the performance of the other party.
Implied in law conditions – “constructive conditions”
- Modern View : Each parties’
performance, or tender of performance is deemed a implied-in-law
(constructive) condition to the other’s obligation to perform.
Thus, neither parties’ duty to perform arises until the other
has performed or tendered performance.
- Legal and procedural effects: are
ordinary the same as it the conditions had been expressly set
forth in the contract.
- Example: In a suit to enforce a land
sale contract calling for a particular closing date (the law
implying that the payment and tender of deed are constructive
conditions concurrent,) the burden is on X to plead and prove
that she tendered performance, even though her performance was
not expressly made a condition of Y’s duty to perform.
All participants in the study group must always follow
the BSL Honor Code.