Today we're going to continue our discussion of conditions precedent. In particular, we look at the waiver of an express condition precedent in Clark versus West in 1908 New York case. In this case, the plaintiff William Clark agreed to write a casebook about corporations law for the defendant West, a publisher. The agreement included a clause requiring Clark to abstain from having any liquor during the time of the contract and said quote, that the payment to him in accordance with the terms of this contract of any money in excess of two dollar per page is dependent on the faithful performance of this, end quote. Clark was to be paid six dollar per page if he abstained. Clark drank and West paid him two dollar per page for the completed work. Clark sued seeking the additional four dollar per page and also claimed that the copyright of the book in the name of a corporation violated the terms of the agreement. The trial court overruled the defendant's demur, the appellate court sustained the demur and the instinct court reversed overruling the demur and remanded. The issue in this case is was the promise not to drink a condition precedent waived by the defendant? Now, as an aside the contract law used to distinguish between conditions precedent and conditions subsequent. And luckily these days you don't have to really know about this distinction, but the distinction used to be made that a condition precedent was a condition that the duty to perform did not exist until the condition was fulfilled whereas with the condition subsequent there wasn't an initial duty to perform that might be eliminated if subsequently a certain condition came about. The real difference between a condition precedent and a condition subsequent is whether it was the promisee's or the promisor's duty to establish whether the condition came about or not. But let's go to a quiz. So, the defendant argued that the plaintiff's promise not to drink was consideration for the payment of the difference between the two dollars and the six dollars per page. The plaintiff argued that the plaintiff's abstinence from alcohol was a condition precedent. Why is this distinction important to the analysis of the case? Well, if the plaintiff's promise not to drink was consideration in exchange for an additional four dollars per page then the promise could not be modified except by a new agreement between the two parties supported by a separate consideration. However, if the abstention from drinking was merely a condition that did not go to the consideration of the contract it could be waived by the defendant without any additional consideration. The court held that the promise not to drink was merely a condition precedent. In the words of the court it was, quote, not a contract to write books in order that the plaintiff shall keep sober, but a contract containing a stipulation that he shall keep sober so that he may write satisfactory books. The court compared the clause requiring Clark to abstain to the clauses governing other terms of the agreement such as those relating to time and method of delivery of the manuscript, revision of proof, citation of cases, assignment of copyrights, keeping track of new cases and citations for new additions and other details which might be waived by the defendant if he saw fit to do so. To be clear, some conditions do go to the consideration of an agreement. A home buyer could have waived without additional consideration a promise to pay that is condition on the contract of using Coho pipe, but the home buyer could not waive without additional consideration the promise to pay that is conditioned on the contract of building the entire house. It's one thing to say for a contractor to go to the buyer and say, "Hey, I don't have any coho pipe, is it alright if I substitute reading pipe? That kind of a condition to pay can be waived. But for a contractor to go to a buyer and say "Hey, I'm not feeling like building your house", the buyer can't agree to waive the condition of the entire house being built. That kind of a duty of the buyer to pay conditioned on the house, that goes too much to the entire consideration. In this case the plaintiff's complaint alleged that West knew Clark failed to observe the stipulation. The opinion says long before the plaintiff had completed the manuscript of the first book undertaken under the contract, the defendant had full knowledge of the plaintiff's non- observance of that stipulation. And that with such knowledge he not only accepted the completed manuscript without objection. But is this bad behavior on the part of West really objectionable? In essence, the court is saying to West, how dare you not tell Clark what Clark already knew that Clark was drinking? But why does West have an obligation to tell Clark that West knows that Clark is drinking? Clark didn't promise not to drink, and West didn't promise to tell Clark if West learns that Clark is drinking. The most important allegation is that West not only accepted the completed manuscript for the book, but also, quote, repeatedly adhowed and represented to the plaintiff that he was entitled to and would receive said royalty payments. That is the additional four dollars per page. And plaintiff believed and relied upon such representations, end quote. These actions according to the court, if established would prove defendant's waiver of plaintiff's performance of that contract stipulation. Therefore, the court reversed the demur and remanded the case. As we discussed in the previous lecture, an express condition allows a promisor to avoid performance unless a certain event occurs. The existence of a condition in a contract makes what would have been an unconditional promise into a conditional promise. If the event does not occur, there is not a duty to perform and the contract is discharged. Some conditions like the one at issue here are for the conditional promisor's benefit. If Clark fails to stay sober, West, the conditional promisor is able to withhold part of the promised payment. But if the condition is not deemed to be consideration for the promisor's promise, the promisor can waive it without any additional consideration. Waiver of a condition is in effect a contract modification because it increases the promisor's duty to perform beyond the original contract terms. The original contract term was for a conditional promise, the waiver makes it an unconditional promise. A contract modification would normally need to be supported by additional consideration to be enforceable. But courts make an exception when the condition precedent was, quote, not the consideration for the contract, end quote. This exception was evident in Clark versus West. The court emphasized that the stipulation prohibiting Clark from drinking again was not a contract to write books in order that the plaintiff shall keep sober, but a contract that he keeps sober so that he may write satisfactory book. The court's language here can be criticized. Wordplay aside, West might have reasonably wanted plaintiff to be sober as a proxy for the likelihood of writing a satisfactory book. In terms of consideration, it's plausible that West would not have been willing to make an unconditional promise to pay the $4 extra per page. This abstinence condition might have been what induced West to promise to pay more money. And so the condition seems to satisfy the bargain for or inducement conception of consideration. On the other hand, the law of conditions fosters a policy favoring freedom from contract. If an expressed condition precedent has failed the promisor maybe discharge from the contract without any obligation to compensate the promisee for past performance. Whether a promisor or like West was in fact prejudiced by the failure to remain abstinent is immaterial. On the other hand, strict application of the law of conditions can produce forfeitures, especially where the promisor is not actually prejudiced by the failure of a condition and the promisee has engaged in extensive preparation to perform or indeed has performed in the past. Put differently, if the condition turns out to be immaterial to the promisor, a discharge will cause promisee to forfeit her reliance and has conferred a benefit on the promisor, discharging the promisor may provide a severe test for our commitment to freedom from contract policy. Courts so dislike the forfeitures, that enforcement of conditions can have that they are both willing to allow waivers or modifications without consideration and they are willing as a factual matter, to find waiver where there are serious questions as to whether waiver actually took place. A waiver has been defined generally as the voluntary relinquishment of a known right. In the context of the express conditions, a promisor may voluntarily relinquish the right to insist on an expressed condition. Analysis reveals waivers of express conditions are associated with three recurring fact patterns; election waiver, estoppel waiver, and waiver without either election or estoppel. These three fact patterns are aptly illustrated by insurance contract examples. First, let's think about election waiver. Imagine that a plaintiff-insured has not satisfied an express condition that notice be given within 30 days after a covered accident, but defendant-insurer, with full knowledge, elects to process the claim rather than deny payment. Because of the promisor's election to process the claim after the condition is failed, the insurer cannot thereafter insist upon the condition. Waiver is here inferred from the promisor's conduct. Estoppel waiver, instead it can be seen in the following example. Immediately after the accident, imagine that defendant-insurer tells plaintiff-insured not to worry about the 30 day notice condition. Relying on this, the plaintiff submits notice within 45 days of the accident and then the defendant refuses to process the claim. The condition is waived because plaintiff has materially changed his or her position in reliance upon defendants representation. Waiver is inferred from the promisor's words the representation and the promisee's reliance. Waiver without election or estoppel can be seen in this example. After the plaintiff-insured has substantially performed the contract, defendant states that it will not insist upon a non-material condition. The condition is waived without election or estoppel but more broadly, when one party is promised or represented that he or she will not insist upon express the conditions, waiver becomes a judicial device to avoid forfeiture in particular cases where an agreed modification cannot be found. The willingness of courts to find waiver without reliance or estoppel is another indication of the judicial hostility to conditions and their potential for forfeiture. It shouldn't surprise you that many courts will not enforce anti waiver provisions which for example, might say that waivers must be supported by consideration or that waivers of conditions must be in writing. The courts find that such anti waiver provisions are also waived by the parties contactor words. In Clark vs West, the plaintiff claimed that the copyright of the book in the name of West Corporation, violated the terms of the agreement. This possible bad action and copyrighting the book in the name of the corporation might have been the real dispute in the case. West by incorporating was playing fast and loose with the copyright to Clark's book, and this made it easier for the court to find a waiver on the abstinence condition. Well, this is a legal realist question influenced by the forfeiture issue. Clark completed the book without apparently any quality impairment and the profits were rolling in. This implies that West got what it really bargained for and could gain a windfall through this forfeiture. So, if West is playing games with the copyright and is trying to get a book worth $6 a page for $2, that's what a good courts is supposed to do. Let's review. Today, we've talked about waivers of express conditions. We learned that the promisor benefiting from an express condition may waive that condition without the promisee providing any consideration for the modification. If the condition does not go to core consideration of the original contract.
