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8. If the man sues the distributor on February 2 for breach of contract, which of the following concepts best supports the man's claim?
On December 16, the man notified the distributor by telephone of the man's resale agreement with the mechanic, and explained that a written notice was not feasible because the man's secretary was ill. The distributor replied, «That's okay. I'll get the engine to you on February 1, as we agreed.» Having learned, however, that the engine had increased in value about 75% since December 1, the distributor renounced the agreement on February 1.
In a writing signed by both parties on December 1, a man agreed to buy from a distributor a gasoline engine for $1,000, delivery to be made on the following February 1. Through a secretarial error, the writing called for delivery on March 1, but neither party noticed the error until February 1. Before signing the agreement, the man and the distributor orally agreed that the contract of sale would be effective only if the man notified the distributor in writing no later than January 2 that the man had arranged to resell the engine to a third person. Otherwise, they agreed orally, «There is no deal.» On December 15, the man entered into a contract with a mechanic to resell the engine to the mechanic at a profit.
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A party who is only required to perform a duty after a condition has been satisfied may nevertheless indicate that he will perform without the condition being satisfied. This decision to forego the benefit of a condition operates as an excuse of that condition, also known as «waiver.» If a contract has already been formed and a party excuses an unperformed condition through waiver, consideration will be necessary for the waiver to be valid. However, there are several exceptions to this requirement for consideration:
(i) If the condition was not material to the original bargain, a party's waiver of the condition will typically be valid even without consideration.
(ii) If a party indicates that he will waive a condition and the other party relies on that purported waiver, the waiver will be valid without consideration.
(iii) When a condition does not occur, if the party owed the conditional duty ignores this fact and performs anyway, it will be a binding waiver without consideration or reliance.
Aside from expressly waiving a condition, a party may imply a waiver by: (i) continuing performance even though the condition has not occurred; and (ii) accepting benefits from the contract.
C is correct. This question is asking which basis will allow the man to win and enforce the contract against the distributor. The agreement between the man and the distributor was subject to an express condition. They agreed that the contract of sale would not come into effect unless the man provided written notice of re-sale on or before January 2. This condition, in fact, did not occur. Although non-occurrence of such an express condition would normally discharge each party's obligation under the contract, this may not be the case if the condition was excused through waiver. Here, the distributor waived the non-occurrence of the condition when she verbally agreed on December 16 to send the engine without written notice, which excused the requirement that the man provide written notice per the condition.
A is incorrect. As a general rule, an express condition must be strictly satisfied before performance will be due. As such, substantial performance of a condition is insufficient when a condition is express.
B is incorrect. This answer is incorrect for multiple reasons. First, the condition at issue is a condition precedent (meaning it must occur prior to performance due) as opposed to a condition subsequent (which is required after performance). Second, when «non-occurrence» alone operates to excuse a condition precedent, it is typically because a condition has already failed to occur and the party who would have benefitted from the condition simply ignores the non-occurrence and continues performing. This is not the fact pattern here, where the condition was waived prior to performance.
D is incorrect. There are no facts provided that indicate the existence of a novation, so this would not be an effective basis for the man to prevail.