Civil Model Jury Charge 4.10 F. CONTINGENT CONTRACT
BILATERAL
CONTRACTS
1. Condition
Precedent
NOTE TO JUDGE
Very often it is difficult to determine whether a “contingency” is a
true condition precedent or is a dependent performance obligation. In the former situation, it is said that
there is no contract because the condition upon which the contract itself was
formed is lacking. Duff v. Trenton
Beverage Co., 4 N.J. 595, 604 (1950). In the later, a contract was formed, but
there may be an excuse for non-performance which protects the defaulting party
from liability for breach. Id. at
605.
Here, [choose
one] (a) the defendant contends that the parties negotiated only to the
point of a tentative agreement and that a final agreement was contingent[1] on
the following [contract term]; (or) (b) the defendant contends that the
parties negotiated a contract which included the following contingency [contract
term].[2] Defendant contends that this contingency had
to exist or occur before the defendant had any duty to perform under the
contract:
[state the asserted contingency]
The plaintiff has the
burden of proving that the parties reached a final agreement (or that the
condition existed, occurred or was excused).
Therefore, to establish his/her right to recover,
the plaintiff must prove that:
a. the parties reached an agreement without
the contingency;
b. if the
agreement was tentative (or included the contingency), plaintiff must prove the
contingency occurred;[3] or
c. if the contract was tentative (or included
the contingency) and the contingency did not occur; plaintiff must prove the
non-occurrence was excused. (The judge
should relate the evidence to whatever excuse is being asserted).
2. Excuses for Failure of Condition Precedent
a. Waiver. Plaintiff has claimed that the right to
insist on the condition [supply facts of condition asserted] has been
waived by the defendant. [See Section
4.d. infra, for elements of waiver.]
b. Estoppel. Plaintiff has claimed that the defendant’s
right to insist on the occurrence of the condition precedent should be excused
because the defendant frustrated or interfered with the occurrence of the
condition.[4] [See Section 4.e. infra, for elements of estoppel].
c. Interference
by Party Claiming Non-occurrence.
Plaintiff has claimed that the defendant’s right to insist on the
occurrence of the condition precedent should be excused because the defendant
frustrated or interfered with the occurrence of the condition. If the defendant prevented or hindered
plaintiff’s performance of the condition then the plaintiff’s recovery can not
be prevented because the condition precedent did not occur. Thus, if plaintiff proves the defendant
interfered with the plaintiff’s ability to perform the condition precedent,
then the plaintiff would be excused from performing the condition
precedent.
d. Impossibility. Plaintiff has claimed that the defendant’s
right to insist on the occurrence of the condition precedent should be excused
because the occurrence of that condition is an impossibility. [See Section 4.a. infra, for elements of impossibility.
Plaintiff
has claimed that defendant’s failure to perform its obligation under the
contract [insert stated obligation] relieved the plaintiff from
performing any of plaintiff’s obligations under the contract and entitles
plaintiff to damages. Plaintiff must
prove that the obligation was vital to the existence of the contract.[6] In other words, the performance of the
defendant’s obligation was so important to the contract that the parties
contemplated that the plaintiff’s corresponding performance was conditioned
upon defendant’s completion of its performance obligation.[7]
4. Excuses for
Non-Performance of a Dependent Covenant
a. Condition
Excused by Impossibility To excuse
the condition because of impossibility or impracticability, the party’s
inability to perform must be because the condition objectively cannot be
accomplished.[8] If the reason the condition cannot be met is
a subjective personal inability, then the condition may not be excused.[9] The plaintiff must prove the performance
could not be done and not just that the plaintiff could not do it. If, however, plaintiff agreed to assume the
risk that the performance could not be performed and proposed its performance
anyway, plaintiff is not excused for non-performance.
b. Condition
Excused by Breach of the Other Party.
Plaintiff here claims that plaintiff’s failure to perform [state
performance obligation] was the result of defendant’s breach. A [performance or condition] can be
excused if the other party breaches the contract and causes the nonoccurrence
of that performance or condition.[10] If the plaintiff could not or would not have
performed the condition, regardless of the defendant’s conduct, the condition
is not excused.[11]
c. Condition
Excused by Repudiation by the Other Party. Plaintiff has claimed that the defendant
cannot insist upon part of their agreement which required plaintiff to [insert
performance obligation] because defendant has repudiated the contract. If a contract is repudiated by one party, a
condition of performance may be excused.
In
other words, if plaintiff proves that defendant indicated a refusal to honor
the contract before [plaintiff’s performance] could be [completed or
met]; the defendant cannot insist on the completion of [plaintiff’s
performance] as a condition for his/her performance. If the plaintiff proves that defendant
repudiated the contract, plaintiff is excused from [insert performance obligation].[12]
d. Condition
Excused by Waiver. Plaintiff has
claimed that defendant has waived the right to insist on performance of the
obligation [insert stated obligation] relieving the plaintiff of the
obligation to perform. To excuse his or
her non-performance, the plaintiff must prove that the defendant knowingly gave
up his or her right to insist on performance of [insert the performance
obligation].[13] In other words, the defendant must have known
that he or she had the right to insist on the completion of [insert
performance obligation], but nevertheless agreed his or her obligation to
perform would not depend on the performance of plaintiff’s obligation. If plaintiff proves this, plaintiff may be
excused from performing his or her obligation.
e. Condition
Excused by Estoppel. Plaintiff
claims that defendant should be forbidden from insisting upon performance of [insert
performance obligation] due to defendant’s conduct. Plaintiff must prove that plaintiff’s
position was changed to plaintiff’s detriment by relying upon the defendant’s
conduct. The plaintiff must prove:
(1) that the
defendant’s conduct amounted to a misrepresentation or a concealment of
material facts;
(2) that the
defendant knew or should have known of the true facts;
(3) that the
plaintiff did not know of the facts concealed or the misrepresentation at the
time plaintiff acted upon the defendant’s conduct;
(4) that the
conduct was done by the defendant with the intention that it be acted upon by
the plaintiff;
(5)
that the plaintiff
reasonably and justifiably relied on defendant’s conduct to plaintiff’s
detriment or harm.[14]
f. Condition Excused by Failure to Give
Adequate Assurances. Plaintiff has
claimed that defendant cannot insist upon the part of their agreement which
required plaintiff to [insert performance obligation], because defendant
has failed to give adequate assurances on his/her/its own performance. If plaintiff had reasonable grounds to
believe that the defendant would commit a breach by failing to perform [insert
performance obligation], plaintiff could rightfully demand reasonable
assurances of defendants performance.
Plaintiff may also suspend his/her/its own performance until he/she/it
receives reasonable assurances of performance from the defendant. If plaintiff proves that defendant failed to
provide reasonable assurances of due performance within a reasonable time,
plaintiff may treat the defendants failure to give reasonable assurances as a
repudiation. [See Section 4.c., supra, for elements of repudiation.] If plaintiff did not have reasonable grounds
to believe that defendant would fail to perform his/her/its obligations under
the contract, then plaintiff’s failure to perform is not justified. As a
consequence, plaintiff may himself/herself/itself be liable to the defendant
for damages for failure to perform obligations.[15]
[See Section 4.b., supra, for elements of material breach.]
[1] Examples of these types of contracts are
real-estate contracts subject to attorney review or financing or contract
content on corporate board approval.
[2] The court determines whether a contract
term is a condition or a promise. See
Giumarra v. Harrington Heights, Inc., 33 N.J. Super. 178, 190 (App.
Div. 1954), aff’d p.c., 18 N.J.
548 (1955).
[3] The burden of establishing the occurrence
of the condition rests upon the party asserting it. Fitzmaurice v. Van Vlaanderen Machine
Company, 110 N.J. Super. 159 (App. Div. 1970), aff’d, 57 N.J. 447 (1971); Karl Sales and Serv. Inc. v.
Gimbel Bros Inc., 249 N.J. Super. 487, 493 (App. Div. 1991).
[4] For example, assume the owner of a house
makes a contract with a real estate broker under which the duty to pay the
broker a commission is conditioned on the passing of title. If the owner wrongfully prevents title
from passing, the owner is in breach of the contract with the broker and the
condition is excused. E. Allan
Farnsworth, Farnsworth on Contracts, Sec. 8.6, 382 (1990). N.J. Tanner Associates v. Ciraldo, 33 N.J.
51 (1960).
[5] As opposed to pure conditions precedent,
this section deals with dependent covenants of performance. That is when one promise to perform is so
material that the corresponding performance is excused if the dependent promise
is not kept.
[7]Connell
v. Parlaveccio, 255 N.J. Super. 45, 49 (App. Div. 1992); Seitz v.
Mark-O-Lite Sign Contractors, Inc., 210 N.J. Super. 646 (Law Div.
1986).
[8]For
example, suppose that an owner’s duty to make progress payment is conditioned
on the contractor furnishing architect’s certificates, and though the work is
properly done, the architect dies before giving a certificate. E. Allan Farnsworth, Farnsworth on
Contracts, Sec. 271 (1979) and Allstate Redevelopment Corp. v. Summit
Assoc., Inc., 206 N.J. Super 318, 324-325 (App. Div. 1985). See also, Calamari and Perillo, Contracts,
Sec. 194 (West 1970).
[9]Duff
v. Trenton Beverage Co., 4 N.J. 605 (1950); Seitz v. Mark-O-Lite
Sing Contractors, Inc., 210 N.J. Super 646 (Law Div. 1986) and Conell
v. Parlaveccio, 255 N.J. Super 45 (App. Div. 1992). Restatement of Contracts, Sec. 301
(1932).
[11]Creek
Ranch Inc. v. New Jersey Turnpike Authority, 75 N.J. 421, 432
(1978). See also, Allstate
Redevelopment Corp. v. Summit Associates, Inc., 206 N. J. Super.
318, 324-325 (App. Div. 1985) (a condition precedent may be excused where
performance is prevented or hindered by a breach of the obligor’s duty of good
faith and fair dealing).
[12]See Neptune Research &
Development v. Teknics Industry System, 235 N.J. Super. 522 (App.
Div. 1989). For example, an insurance
company issues a policy insuring B against theft, and providing that no payment
will be made unless written notice is given within 60 days after loss. A loss occurs, and B immediately notifies A
by telephone. A repudiates by informing
B without adequate reason that it will not pay the loss. Because of this, B does not give written
notice to A. B has a claim against A for
the amount of the loss, despite failing to comply with the condition. Restatement (Second) of Contracts,
Sec. 255 (1981) & Restatement of Contract, Sec. 306 (1932).
[13]West
Jersey Title and Guaranty Co. v. Industrial Trust Co., 27 N.J. 144,
152 (1958). North v. Jersey Knitting
Mills, 98 N.J.L. 157, 159 (E. & A. 1922); Petrillo v.
Bachenberg, 263 N.J. Super. 472, 480 (App. Div. 1993), aff’d
139 N.J. 472 (1995); Bertrand v. Jones, 58 N.J. Super. 273
(App. Div. 1959); Plassmeyer v. Brenta, 24 N.J. Super. 322 (App.
Div. 1953).
[14]Palatine
I v. Planning Board of Montville, 133 N.J. 546 (1993); Foley
Machinery v. Amland Contractors, 209 N.J. Super. 70, 75 (App. Div.
1986); Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat’l
Bank, 163 N.J. Super. 463, 479 (App. Div. 1978); New Jersey Bank
v. Palladino, 146 N.J. Super.
13 (App. Div. 1976), mod. on other grounds 77 N.J. 33
(1978); Clark v. Judge, 84 N.J. Super. 35, 53 (Ch. Div. 1964), aff
o.b., 44 N.J. 550 (1965).
