essential that the promisor's conduct should be the cause of the promisee's failure to perform the condition. If the promisee could not or would not have performed the condition in any event, the manifestation of unwillingness or inability of the promisor to perform will not give rise to a cause of action because the promisee cannot allege and prove that he would have become entitled to receive performance by complying with the condition, had it not been for the promisor's misconduct." It has been said that the conduct of the promisor must show unequivocally that performance of the condition will be useless in order to render the principle applicable,78 but it may be doubted if this is always true. Where the conduct of the promisor shows that it is very unlikely that he will perform, even though there is a chance that he may, and performance of the condition precedent will involve a serious detriment to the promisee, if not followed by due performance on the part of the promisor, it seems reasonable to hold that a right of action may arise without performance of the condition.79 It is generally said of the excuses considered in this section that the promisor has "waived" performance by the other side. Such nomenclature, however, seems to imply that the right of the promisee to recover without performing the condition depends upon the permission of the promisor, whereas his right is given him by law irrespective of the promisor's wishes. The "Winslow v. Dundom, 46 Mont. 71, 125 Pac. 136; Reid v. America Co., 136 N. Y. S. 75. See also infra, §§ 871, 882. 78 In Caldwell v. Cockshutt Plow Co., 30 Ont. Law Rep. 244, 257, the court said: "No doubt, ‘a positive absolute refusal by one party to carry out the contract is, in itself, a breach of the contract on his part, and dispenses the other party from the useless formality of tendering the performance of a condition precedent.' McCowan v. Mackey, 22 C. L. T. Occ. N. 100; but it must be something of a positive unequivocal character, equivalent to a statement by the one that, even if the other should perform his part, he himself would not perform his. Such a case was Withers v. Reynolds, 2 B. & Ad. 882, where the substance was, 'You may bring your straw, but I will not pay you upon delivery, as under the contract I ought to do.' But everything which the one party may consider to be a breach of the contract or a waiver of a condition precedent is not so; there must be something unequivocal and clear. The authorities are summed up in Mersey Steel and Iron Co. v. Naylor Benzon & Co., 9 App. Cas. 434." There seems some failure here to distinguish between what amounts to a breach of contract and what amounts to an excuse of a condition precedent. 79 See infra, §§ 877 et seq. condition is as fully excused where the promisor says, "I insist that you shall perform the condition on your part although I can not and will not perform my promise afterwards," as where the promisor says, "You need not perform the condition because I can not or will not perform my promise." Moreover, if in any true sense the promisor waived performance of the condition, the promisee would become entitled to the full performance which the promisor contracted to render after receiving performance of the condition, whereas if performance of the condition was wholly or partly the price or exchange which the promisor was to receive for his own performance, the measure of damages is the difference between the value of what the promisee was to give, and of what he was to receive for it. § 768. Conditions precedent as well as conditions concurrent are excused by the promisor's prospective nonperformance. A distinction has been attempted between conditions concurrent and conditions precedent in regard to excuse by prospective failure to perform the promise. Where the performance of the condition requires coöperation on the part of the promisor for its performance, as is the case with concurrent conditions, and the promisor announces beforehand that he will not give such coöperation, there is threatened prevention. The promisee may clearly take the promisor at his word unless he withdraws his statement before the time for performance comes, and therefore may maintain an action against the promisor without tendering performance of the concurrent condition.80 Where, however, performance of the condition requires no coöperation by the other party, there is no prevention of performance. The promisee can perform. He merely does not wish to do so because his performance will not be followed by performance on the part of the promisor. To the argument that it is unreasonable to require the promisee to perform the condition when it is certain that he will not secure performance of the counter promise, the answer has been made "that it is not unreasonable to require him to do so if he wishes to sue on the covenant or promise, for it is the necessary consequence 80 See cases cited in the previous section. of the conditions being precedent. The only security that one ever has, when he performs a condition precedent, that the covenant or promise will be performed, is an action for damages, and that the plaintiff has in the case supposed." 81 This argument, however, is opposed to justice and practical convenience, and is required by no theoretical principle. The injustice of requiring performance of the condition in order to acquire a right of action when the promisor has indicated that he will not keep the promise is obvious. Contracts are not made with the expectation that they will be broken, but with the expectation that they will be performed. A promisee will rarely think it wise to perform a condition precedent, involving large expense, when he knows that the promisor will not perform in his turn. Yet to deny him because of this a right of action against the promisor who has brought the situation about is unjust and inconvenient. It may be urged that the contrary view involves enforcing against the promisor a promise which he never made; namely, an absolute instead of a conditional promise; but owing to his own conduct he should be precluded from insisting upon the condition. There is no doubt that this is the law, and that no distinction is taken by the courts in this respect between conditions which require cooperation or concurrent action by the promisor and those which do not.82 81 Langdell, Summ. of Contracts, $172. 82 "If a man binds himself to do certain acts which he afterwards renders himself unable to perform, he thereby dispenses with the performance of conditions precedent to the act which he has so rendered himself unable to perform." Per Maule, J., Sands v. Clarke, 8 C. B. 751, 762. See also Newcomb v. Brackett, 16 Mass. 161, and cases, especially insurance cases, in the preceding section. CHAPTER XXV EXCUSE OF CONDITIONS AND PROMISES WHICH WOULD CAUSE A FORFEITURE OR PENALTY What is meant by a forfeiture.... 769 What is meant by penalty... 770 Non-enforceability of provisions for forfeiture in mortgages. 771 Early history of the jurisdiction of equity to relieve from forfeiture and penalties..... 775 Provisions for penalty are invalid in any contract. 776 How far the question of penalty or liquidated damages is one of construction 777 Intention of the parties..... 778 Whether the liquidation must be reasonable. 779 Distinction between contracting in advance for a penalty and making an unreasonable accord after breach.. 780 Alternative contracts... 781 The form of a contract cannot make a penalty enforceable... 782 Rules aiding the court in determining whether a sum is liquidated damage.. 783 Classification by Somerville, J., and by Lord Dunedin. . . . 784 Reasonable stipulated damages per day for delay are enforceable. 785 Stipulation for attorney's fees... 786 Other illustrations. . . . . 787 Whether the tendency of the court is to hold a doubtful provision a penalty or liquidated damages. 788 Prevention of performance makes provision for liquidation inoperative. Excuse for non-performance of a condition requiring a certificate of an architect or engineer. 794 Distinction between certificates in building contracts and under insurance policies.. 795 Effect of the architect's death.. 796 Unreasonable but not fraudulent refusal of certificate..... 797 A builder may be liable though he has received an architect's certificate... Where a debt has arisen, a condition relating to the time of payment which 798 becomes impossible is dispensed with.. 799 Effect of a condition requiring valuation-transfer of property. 800 801 802 Failure of valuation owing to the fault of either party. Promises to pay when able.. Substantial performance... Relief from conditions is not wholly a matter of construction. § 769. What is meant by a forfeiture. 803 804 805 806 807 808 809 810 811 Though the law cannot create contractual obligations which are not based on the expressed intention of the parties,1 it can excuse the performance either of conditions or promises agreed upon by the parties for any reasons which seem to it just. The mere fact that a promise or condition is somewhat harsh or unfair in its operation is not enough to furnish such an excuse, but a principle of somewhat vague boundaries prohibits the enforcement of forfeitures or penalties. Though these two words are often used as synonyms, the word forfeiture carries an implication of deprivation of something previously owned as distinguished from subjection to a liability, but the distinction is often blurred. The use of the term forfeiture became common in connection with the doctrines of equity concerning mortgages. The fundamental idea is doubtless that the person subjected to a forfeiture thereby loses property which belonged to him, without adequate return and without any breach of duty on his part commensurate in value with the property lost. Even in the case of a mortgage, however, it will be observed that the enforcement of the mortgage, according to the strict terms of the contract, does not work a forfeiture of property. When the transaction was entered into, the complete title was vested in the mortgagee; certainly, in an old-fashioned mortgage so the deed provided. By failing to pay the debt on the law day the mortgagor technically does not lose a title which he had immediately before that day; he fails to acquire again by the happening of a condition subsequent a title which he had lost when he made the mortgage. But however valid this argument may be from The law can wherever desirable create obligations without regard to expressed intention, but they are not contractual. |