American Contract Law for a Global Age, 2017a

Unit 19
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TERMS AND INTERPRETATION
Part Three
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Conditions
FOCUS OF THIS UNIT
Conditional Obligations. Parties to contracts make promises that they will do
things. But sometimes those promises are supposed to be performed only if something
happens to trigger a duty. Suppose, for example, you buy a single-premium life
insurance policy, which costs you $100,000 but will pay your estate $2 million
whenever you die. You, the insured, have no obligation to die. But the insurance
company has no obligation to pay money to your estate until you do. The contract is
in force, and you have fully performed, but the insurer’s duty is conditional on the
occurrence of your death. If for some reason you to manage to live forever, the contract
will last forever but you will never get the money. The best way to think of conditions
is as triggers to obligations that occur within contracts.
Two broad categories of conditions exist: express and implied. In both, the party
refusing to perform claims its duty was never triggered because the other party did
not satisfy the condition. The party seeking performance may claim variously that (1)
properly interpreted, the claimed condition is not a condition at all; (2) that there is
a condition, but it was in fact complied with; (3) even if the condition was not strictly
complied with, there is a good excuse for not doing so; or (4) some or all of the above.
Spotting Express Conditions. You can often recognize express conditions by
phrases like “if . . . then,” “provided that,” “upon the occurrence of,” and the like. The
established hornbook law, repeated by many courts, is that express conditions like
these must be complied with strictly. But, as you will also see in this unit, there are
ways that a party can get by with something less than strict compliance.
Unseen Implied Conditions. Implied or constructive conditions are those read
into the contract by courts, in much the same way as other implied terms. Conditions
are usually implied when it appears that the parties intended that performance occur
in a particular sequence. The leading English case is Kingston v. Preston, 99 Eng.
Rep. 437 (K.B. 1773), which involved the sale of a business. The seller agreed to
convey the business, and the buyer agreed to put up a bond to ensure payment for
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UNIT 19: CONDITIONS 381