Establishing conditions in contracts [No. 86]
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Establishing conditions in contracts [No. 86]


Often times, people have sequential promises:
if you do this I can do that, if you do the other thing, I can do something else. If you have what is known as a complete contingent
state contract, there will be no surprises. Most people, however, when they draft an agreement
simply talk about the basic elements so that is left to implication to fill in the gaps. So I agree to sell you certain goods which
you agree to deliver me. The day comes for the delivery and you don’t
do it. Am I still required to pay for the goods and
then sue you for their non-delivery or can I withhold the payment by virtue of the fact
that you haven’t delivered? The general answers to the law of conditions
is that in order to make the exchange efficient, no person is essentially required to put himself
at risk to the other party which is in breach. So, if you do not deliver me the goods on
time by the law of constructive conditions, I do not pay for them um on the time. If I, in fact, am not prepared to pay for
the goods, you, in turn, do not have to deliver. So that’s the basic pattern of simultaneous
conditions. Situation becomes more complicated when it
turns out that the conditions are not simultaneous but they’re sequential. And so what I have to do is to pay you money
and you agree to build me a house and I am going to make progress payments to you and
now it turns out I can pay the money in one fell swoop but the construction will take
several years to complete or several months. Generally speaking what people do by way of
business is they basically break the big contract into little contracts so that after the first
month I owe you a progress payment, after the second month another progress payment
and so forth. These contracts become very difficult if either
the performance or the payment, say in the middle of this process is not done and it’s
the same basic point that one makes everywhere in the law of contract. If people keep the transaction on tracks,
everybody knows what’s to be done. When they go off the tracks, often the agreement
is not complete and so judges have to fill in the terms and the basic intuition that
they have is filling that set of terms in the event of breach which reduces the likelihood
of their occurrence and furthermore makes sure that the innocent party is most likely
uh to regain its lost ground. And the law of conditions is a huge part of
the law of contract under the doctrine of implication, the general premise of which
is if the skeletal terms are given, imply the additional terms so as to maximize the
efficiency of the relationship. That is, to make sure that you increase the
prospects of joint gain ah through proper performance on both sides.

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