Lecture on Contractual Conditions

Introduction to Contractual Conditions

• Conditions as 'if-then' triggers in contracts.
• Different treatment from other contractual terms.
• Focus on express conditions and waivers.

Definition and Nature of Conditions

• Defined in Section 224 of the Restatement (Second) of Contracts.
  • An event not certain to occur, which must occur before performance becomes due, unless excused.
• Conditions must be indefinite, triggering obligations or liability.

Creation of Conditions

• Express Conditions: Created by agreement of parties.
  • Example: "North Houston International LLC vs Payne Weber Real Estate Investments Inc"
• Implied Conditions: Supplied by the court based on contract terms.

Case Study: North Houston International LLC vs Payne Weber

• Condition: Payne Weber not obligated to fund loan until receipt of estoppel certificates.
• Estoppel Certificates: Represent no claims/disputes against landlord from tenants.
• Case Outcome: North Houston failed to provide required certificate from U.S. Customs due to regulations.
• Lesson: Importance of structuring conditions carefully in contracts.

Express Conditions and Strict Compliance

• Concept: Conditions must strictly comply unless an exception applies.
• Legal Impossibility does not excuse non-performance of conditions.

Case Study: Clark vs West

• Clark, an author, contracted with West publishers.
• Condition: Abstinence from alcohol for additional payment.
• Key Issue: Whether this condition can be waived.
• Court's Analysis:
  • Condition vs. Consideration.
  • Conditions can be waived; consideration cannot.
• Outcome: Waiver of condition by West due to delayed enforcement.

Waiver of Conditions

• Waiver: Intentional relinquishment of a known right.
• Conditions can be waived by conduct of parties.
• Example: West's inaction on alcohol condition.

Lessons Learned

• Always assess the enforceability and necessity of conditions in contracts.
• Understand potential for waiver by conduct or inaction.

Next Steps

• Future lessons will cover disproportionate forfeiture and implied conditions.