Contractual Condition
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A Contractual Condition is a legal condition (requirement, or stipulation) within a contract that specifies an event that triggers a contractual obligation.
- Context:
- It can (often) be a Contractual Term.
- It can range from being a Contractual Condition Precedent, to being a Contractual Condition Concurrent, to being a Contractual Conditions Subsequent (each defining different points at which obligations must be met; before, during, or after the execution of the contract).
- It can ensure that the parties involved have clear guidelines on what needs to happen for their contractual duties to be triggered, maintained, or terminated.
- It can (often) help to mitigate risks and set expectations.
- ...
- Example(s):
- in a Condition-Triggered Obligation Provision.
- Contractual Condition Precedent might require a party to secure financing before the purchase of property is finalized, meaning the sale is contingent upon obtaining the necessary funds.
- Contractual Condition Subsequent that might release an employee from a non-compete clause if the employer ceases to operate in a particular market.
- Concurrent Contractual Condition that specifies a Delivery Date for the provided services agreed by both parties.
- Concurrent Contractual Condition that setts a Payment Schedule for paying employees and services provided agreed by both parties.
- Concurrent Contractual Condition of adhering to specific Quality Standards as agreed by both parties.
- ...
- Counter-Example(s):
- General promises within a contract that do not specify conditions under which obligations are to be fulfilled.
- Contractual clauses that do not include "if," "provided that," "in the event that," etc., which typically signal a conditional requirement.
- Contractual Provisions.
- Contractual Obligations.
- Negotiation Term.
- See: Contract Content-based Rule Consequent, Contract Law, Breach of Contract, Contingency Clause, Contract Management, Contract Content-based Policy Rule, Legal Language Processing.
References
2024a
- (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Contract#Conditions Retrieved:2024-7-28.
- Common law jurisdictions typically distinguish three different categories of contractual terms, conditions, warranties and intermediate terms, which vary in the extent of their enforceability as part of a contract. English common law distinguishes between important conditions and warranties, with a breach of a condition by one party allowing the other to repudiate and be discharged while a warranty allows for remedies and damages but not complete discharge.[1] [2] In modern United States law the distinction is less clear but warranties may be enforced more strictly.[3] Whether or not a term is a condition is determined in part by the parties' intent.[2] [4] In a less technical sense, however, a condition is a generic term and a warranty is a promise.[1] In specific circumstances these terms are used differently. For example, in English insurance law, violation of a "condition precedent" by an insured is a complete defence against the payment of claims.[5] In general insurance law, a warranty is a promise that must be complied with.[5] In product transactions, warranties promise that the product will continue to function for a certain period of time. In the United Kingdom, the courts determine whether a term is a condition or warranty, regardless of how or whether the term was classified in the contract. [6] [7] Statute may also declare a term or nature of term to be a condition or warranty. For example, the Sale of Goods Act 1979 s15A provides that terms as to title, description, quality and sample are generally conditions. [8] The United Kingdom has also developed the concept of an "intermediate term" (also called innominate terms), first established in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]. Traditionally, while warranties are contractual promises which are enforced through legal action, regardless of materiality, intent, or reliance,[3] representations are traditionally precontractual statements that allow for a tort-based action (such as the tort of deceit) if the misrepresentation is negligent or fraudulent.[9] In U.S. law, the distinction between the two is somewhat unclear.[3] Warranties are generally viewed as primarily contract-based legal action, while negligent or fraudulent misrepresentations are tort-based, but there is a confusing mix of case law in the United States.[3] In modern English law, sellers often avoid using the term "represents" in order to avoid claims under the Misrepresentation Act 1967, while in America the use of "warrants and represents" is relatively common.[10] English courts may weigh parties' emphasis in determining whether a non-contractual statement is enforceable as part of the contract. In the English case of Bannerman v White, [11] the court upheld a rejection by a buyer of hops which had been treated with sulphur since the buyer explicitly expressed the importance of this requirement. The relative knowledge of the parties may also be a factor, as in English case of Bissett v Wilkinson,[12] where the court did not find misrepresentation when a seller said that farmland being sold would carry 2000 sheep if worked by one team; the buyer was considered sufficiently knowledgeable to accept or reject the seller's opinion.
According to Andrew Tettenborn et al, there are five differing circumstances under which a contractual term will become a condition:
- A term is a condition (rather than an intermediate or innominate term, or a warranty), in any of the following five situations: (1) statute explicitly classifies the term in this way; (2) there is a binding judicial decision supporting this classification of a particular term as a "condition"; (3) a term is described in the contract as a "condition" and upon construction it has that technical meaning; (4) the parties have explicitly agreed that breach of that term, no matter what the factual consequences, will entitle the innocent party to terminate the contract for breach; or (5) as a matter of general construction of the contract, the clause must be understood as intended to operate as a condition.
- Common law jurisdictions typically distinguish three different categories of contractual terms, conditions, warranties and intermediate terms, which vary in the extent of their enforceability as part of a contract. English common law distinguishes between important conditions and warranties, with a breach of a condition by one party allowing the other to repudiate and be discharged while a warranty allows for remedies and damages but not complete discharge.[1] [2] In modern United States law the distinction is less clear but warranties may be enforced more strictly.[3] Whether or not a term is a condition is determined in part by the parties' intent.[2] [4] In a less technical sense, however, a condition is a generic term and a warranty is a promise.[1] In specific circumstances these terms are used differently. For example, in English insurance law, violation of a "condition precedent" by an insured is a complete defence against the payment of claims.[5] In general insurance law, a warranty is a promise that must be complied with.[5] In product transactions, warranties promise that the product will continue to function for a certain period of time. In the United Kingdom, the courts determine whether a term is a condition or warranty, regardless of how or whether the term was classified in the contract. [6] [7] Statute may also declare a term or nature of term to be a condition or warranty. For example, the Sale of Goods Act 1979 s15A provides that terms as to title, description, quality and sample are generally conditions. [8] The United Kingdom has also developed the concept of an "intermediate term" (also called innominate terms), first established in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]. Traditionally, while warranties are contractual promises which are enforced through legal action, regardless of materiality, intent, or reliance,[3] representations are traditionally precontractual statements that allow for a tort-based action (such as the tort of deceit) if the misrepresentation is negligent or fraudulent.[9] In U.S. law, the distinction between the two is somewhat unclear.[3] Warranties are generally viewed as primarily contract-based legal action, while negligent or fraudulent misrepresentations are tort-based, but there is a confusing mix of case law in the United States.[3] In modern English law, sellers often avoid using the term "represents" in order to avoid claims under the Misrepresentation Act 1967, while in America the use of "warrants and represents" is relatively common.[10] English courts may weigh parties' emphasis in determining whether a non-contractual statement is enforceable as part of the contract. In the English case of Bannerman v White, [11] the court upheld a rejection by a buyer of hops which had been treated with sulphur since the buyer explicitly expressed the importance of this requirement. The relative knowledge of the parties may also be a factor, as in English case of Bissett v Wilkinson,[12] where the court did not find misrepresentation when a seller said that farmland being sold would carry 2000 sheep if worked by one team; the buyer was considered sufficiently knowledgeable to accept or reject the seller's opinion.
- ↑ 1.0 1.1 Gillies P. (1988). Concise Contract Law, p. 105. Federation Press.
- ↑ 2.0 2.1 .
- ↑ 3.0 3.1 3.2 3.3 West GD, Lewis WB. (2009). Contracting to Avoid Extra-Contractual Liability—Can Your Contractual Deal Ever Really Be the "Entire" Deal? The Business Lawyer.
- ↑ Koffman L, MacDonald E. (2007). The Law of Contract. Oxford University Press.
- ↑ 5.0 5.1 Burling JM. (2011). Research Handbook on International Insurance Law and Regulation. Edward Elgar Publishing.
- ↑ Poussard v Spiers and Pond (1876) 1 QBD 410
- ↑ Bettini v Gye (1876) 1 QBD 183
- ↑ As added by the Sale of Goods Act 1994 s4(1).
- ↑ Primack MA. (2009). Representations, Warranties and Covenants: Back to the Basics in Contracts. National Law Review.
- ↑ Ferara LN, Philips J, Runnicles J. (2007). Some Differences in Law and Practice Between U.K. and U.S. Stock Purchase Agreements . Jones Day Publications.
- ↑ Bannerman v White [1861] EngR 713; (1861) 10 CBNS 844, Court of Common Pleas (United Kingdom).
- ↑ Bissett v Wilkinson [1927] AC 177.
2024b
- (ChatGPT-OpenAI, 2024) ⇒ Prompt: Summarize the concept Contractual Condition (Context: Contract Law) in 1- 2 paragraphs. ChatGPT (model:gpt-4o). Retrieved: 2024-07-27.
- QUOTE: In contract law, a contractual condition is a specific, explicit stipulation or prerequisite included within a contract that must be satisfied for the obligations outlined in the agreement to become enforceable. Conditions can either be precedent, concurrent, or subsequent. A condition precedent is an event or state of affairs that must occur before a party is required to perform their contractual obligations. A concurrent condition requires mutual simultaneous performance among the contracting parties. A condition subsequent is an event or state of affairs that, if it occurs after the contract is in effect, can terminate the obligation to perform further duties under the contract.
The primary role of a contractual condition is to allocate risk and manage expectations between the parties, ensuring that certain fundamental criteria must be met to proceed with the obligations of the contract. If these conditions are not fulfilled, the affected party may have the right to terminate the contract or be excused from their duties, thus protecting their interests and ensuring fairness in the contractual arrangement.
- QUOTE: In contract law, a contractual condition is a specific, explicit stipulation or prerequisite included within a contract that must be satisfied for the obligations outlined in the agreement to become enforceable. Conditions can either be precedent, concurrent, or subsequent. A condition precedent is an event or state of affairs that must occur before a party is required to perform their contractual obligations. A concurrent condition requires mutual simultaneous performance among the contracting parties. A condition subsequent is an event or state of affairs that, if it occurs after the contract is in effect, can terminate the obligation to perform further duties under the contract.
2024b
- (UpCounsel, 2024) ⇒ (2024) ⇒ https://www.upcounsel.com/difference-between-warranty-and-condition-in-contract-law]. In: UpCounsel law articles. Retrieved: 2024-07-27.
- QUOTE: Conditions are certain obligations, terms, and provisions imposed by both parties. Conditions are indispensable, and they need to be satisfied. Conditions are obligations that a party is required to fulfill, such as completing a duty or task. Because it's required, it's an event that affects the contract.
2021
- (WDT, 2021) ⇒ Wex Definitions Team (2021). https://www.law.cornell.edu/wex/condition). In: Cornell Law School Wex Defintions.
- QUOTE: A condition is a requirement or limitation involved in a contract, trust, law, or other legally recognized document that changes the rights and duties of those involved. Contracts often have numerous conditions which set out the parameters of the agreement, and if one party does not fulfill or follow a condition, the other party may have a right to damages or to terminate the agreement. Trusts often use conditions to control how the assets are to be delegated based upon the wishes of the grantor. Examples of conditions:
- Pear Inc. and ABC Building Co. enter into a contract where Pear Inc. will provide specialized glass to ABC Building Co. upon the condition that ABC Building Co. keeps the contract a secret.
- Sarah bequests to each of her children $50,000 upon the condition that each child finishes college.
- QUOTE: A condition is a requirement or limitation involved in a contract, trust, law, or other legally recognized document that changes the rights and duties of those involved. Contracts often have numerous conditions which set out the parameters of the agreement, and if one party does not fulfill or follow a condition, the other party may have a right to damages or to terminate the agreement. Trusts often use conditions to control how the assets are to be delegated based upon the wishes of the grantor. Examples of conditions:
2019
- (Murray, 2019) ⇒ Joanne Murray (2019) ⇒ "What is a Contract: Part 3: Conditions - When Is a Promise No Longer a Promise?". In: AMM Law Blog.
- QUOTE: Another key element of a typical contract is a condition. A condition is an event that must occur or a fact that must be true before a party is obligated to perform his obligations under a contract. Conditions are used to allocate risk by making a party’s obligations, which would otherwise be absolute, dependent on circumstances that are usually outside of that party’s control. The risk of those circumstances not occurring is thus shifted to the other party. For example, your agreement to buy a parcel of real estate might be conditioned on your ability to obtain financing. If you are unable to get financing, you are not obligated to proceed with the sale. Your failure to perform your obligations is excused and is not a breach; the seller will have no claim for damages against you based on your failure to perform. A condition is not necessarily tied to a third party’s performance of an action (such as a bank agreeing to lend money to the buyer) but is sometimes linked to the performance of an obligation by the other party. Some conditions are dependent on weather or similar events that are altogether outside of the contracting parties’ and third parties’ control.