Conditions
McGraw-Hill/Irwin
©2008 The McGraw-Hill Companies, All Rights Reserved
Objectives
Chapter Objectives:
• Use vocabulary regarding conditions properly
• Differentiate between a covenant and a
condition
• Discuss the practical implications of conditions
precedent, subsequent, and concurrent
• Evaluate whether the condition was created
expressly, impliedly in fact, or impliedly in law
• Determine the effect of the condition on the
performance required under the contract
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Objectives
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• This chapter will explore HOW and WHEN the
performance will be carried out IF at all.
Conditions place requirements on the
circumstances surrounding the parties’
performance obligations
• These requirements may have to occur before,
during, or after the parties act upon their
promises to each other. These conditions may be
created by words, actions, unspoken intentions,
or operation of law
Objectives
• These requirements may have to occur before,
during, or after the parties act upon their
promises to each other. These conditions may
be created by words, actions, unspoken
intentions, or operation of law
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Types of Conditions
• Condition
– An event that may or may not happen, but
upon which the rest of the performance of
the contract rests
– The most common condition in a contract
relates to when contractual obligations
become due—when do the parties actually
have to do what they promised to do?
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Types of Conditions
• Covenant
– The promise upon which the contract rests
– A covenant is the contractual promise to
perform with no strings attached
– If the person does not fulfill his covenant,
his is in breach
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Types of Conditions
• There are three types of “timing” conditions
1. Condition precedent
– An event that happens beforehand and
gives rise to the parties’ performance
obligations. If the condition is not
satisfied, the parties do not have a
duty to perform
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Types of Conditions
• There are three types of “timing” conditions
2. Condition subsequent
− An event that, if it happens after the
parties’ performance obligations,
negates the duty to perform
− If the condition is satisfied, the parties
can “undo” their actions
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Types of Conditions
• There are three types of “timing” conditions
3. Concurrent condition
− An event that happens at the same
time as the parties’ performance
obligations
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Method of Creation
• There are three means of creating conditions.
Conditions may be
1. Express
2. Implied in fact, or
3. Implied in law
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Method of Creation
• Express conditions
– Requirements stated in words, either
orally or written, in the contract
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Method of Creation
• Express conditions
– While the court usually interprets these
express conditions strictly, conditions
that are not related to the subject matter
of the agreement may not be enforced so
as to avoid the contract entirely. Contract
law likes to preserve contracts where
possible
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Method of Creation
• The evidence of the existence of these implied
in fact conditions is determined by the
surrounding circumstances
• If you enter into a sales and delivery contract
with a merchant, the express condition is that
you will pay for the goods
• The implied in fact condition is that you will
allow the delivery person access to your home
to actually deliver the goods you purchased
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Method of Creation
• Implied in fact
− Conditions that are not expressed in words
but that must exist in order for the terms
of the contract to make sense and are
assumed by the parties to the contract
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Method of Creation
It is important to note that express
conditions trump implied in fact
conditions. A court will not “ insert terms
into an agreement by implication unless
the implication arises from the language
employed or is indispensable to effectuate
the intention of the parties.”
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Method of Creation
• Implied in law
– Conditions that are not expressed in words
but are imposed by the court to ensure
fairness and justice as a result of its
determination
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Method of Creation
• Time for performance
– A condition that requires each party be
given a reasonable time to complete
performance
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Method of Creation
Through an examination of the terms of
the contract, the paralegal student can
determine if and when performance
may become due.
Conditions may take many forms and it is
important that they are properly
categorized so that their impact on the
agreement as a whole can be
determined.
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Method of Creation
• What paralegal students need to know comes
from their kindergarten days
• The courts expect people to treat others fairly
and in a manner in which we would like to be
treated, by implying the condition that
neither party do anything to harm the other’s
interest in the subject matter of the
agreement, nor that either party do anything
to injure the other party’s right to receive the
fruits of the contract
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Method of Creation
• Through an examination of the terms of the
contract, the paralegal student can determine
if and when performance may become due.
Conditions may take many forms and it is
important that they are properly categorized
so that their impact on the agreement as a
whole can be determined
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Summary
• Contractual conditions are those terms, other
than the actual performance promises, that
the parties incorporate as part of the
contract. They deal with when and how the
parties are to perform
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Summary
• Conditions precedent deal with an occurrence
that must come before the party’s obligation
to perform
• Conditions subsequent deal with events that
occur after a party’s performance pursuant to
the contract and they release the parties from
having to finish performance or totally excuse
previous performance without penalty
• Concurrent conditions deal with obligations to
perform that occur simultaneously
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Summary
• Conditions may be:
1. Express: They are specifically stated in
words by the parties themselves
2. Implied in fact: Those occurrences must
take place in order for the parties to
perform. In good faith, the parties expect
these conditions without having to say
them
3. Implied in law: They are imposed by the
court out of fairness and justice
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