Interpretation, Conditions and Performance: every key term you need (+ practice quiz)
25 flashcard terms for Contracts Topic 6, written to match the course framework. Study them here, then drill them as interactive flashcards, or test yourself with the 15-question quiz — free, no account needed.
The interpretive stance that unambiguous contract language is given its ordinary meaning without extrinsic aid, still followed by New York and other formalist jurisdictions.
Ambiguity
Language reasonably capable of more than one meaning, whether patent on the face of the document or latent once the surrounding circumstances are known.
Contra proferentem
The tie-breaking canon construing genuinely ambiguous language against the party who drafted it, applied with special force to insurance policies and adhesion contracts.
Raffles v. Wichelhaus
The two ships named Peerless case: with no way to choose between the parties' equally reasonable meanings, there was no mutual assent and no contract.
Frigaliment Importing v. B.N.S. International
The chicken case, where the buyer bore the burden of proving that a trade term meant young broilers rather than any bird of the stated weight.
Hierarchy of interpretive sources
Express terms control, then course of performance, then course of dealing, then usage of trade, with the later sources used to explain rather than override clear language.
Implied duty of good faith
Every contract carries an obligation of honesty in fact and observance of reasonable commercial standards of fair dealing in performance and enforcement.
Best efforts obligation
A duty imposed on exclusive dealers and licensees to use diligence appropriate to the circumstances to generate the returns the other party bargained for.
Condition
An event, not certain to occur, that must happen before performance under a contract becomes due unless the event is excused by waiver, prevention, or forfeiture concerns.
Express condition
A condition stated in the contract itself, typically signalled by words such as if, provided that, or on condition that, and enforced by a strict compliance standard.
Constructive condition of exchange
A condition the court implies to sequence performances, so that one party's substantial performance is a condition of the other party's duty to pay.
Condition precedent
An event that must occur before a duty of performance arises, such as an architect's certificate issuing before the owner's obligation to make final payment.
Condition subsequent
An event whose occurrence discharges a duty that had already become due, with the burden of proof falling on the party asserting discharge.
Concurrent conditions
Mutually dependent performances due at the same time, such as tender of the deed and tender of the purchase price at a real estate closing.
Satisfaction of a party as a condition
Where personal taste governs, honest dissatisfaction suffices, but for mechanical fitness or commercial value courts require reasonable dissatisfaction to defeat the duty.
Waiver of a condition
A voluntary relinquishment of a known condition benefiting the waiving party, effective without consideration where the condition is a minor part of the agreed exchange.
Prevention doctrine
A party whose wrongful conduct prevents a condition from occurring cannot rely on its nonoccurrence to escape its own duty of performance.
Excuse of condition to avoid forfeiture
A court may excuse a nonmaterial express condition where insisting on it would cause disproportionate forfeiture and the condition was not a material part of the exchange.
Substantial performance
Performance that departs only insignificantly from what was promised, which satisfies the constructive condition and entitles the performer to the price less damages.
Jacob and Youngs v. Kent
Installing a different but equivalent brand of pipe was substantial performance, so damages were the trivial difference in value rather than the cost of tearing out the walls.
Material breach
A failure serious enough to justify the injured party in suspending performance, judged by deprivation of expected benefit, adequacy of compensation, forfeiture, cure and good faith.
Perfect tender rule
Under Article 2 a buyer in a single-delivery contract may reject goods that fail in any respect to conform, a stricter standard than the common law substantial performance test.
Seller's right to cure
A seller whose tender was rejected may cure within the contract time, or beyond it for a reasonable period if it had reasonable grounds to believe the tender would be acceptable.
Divisible contract
An agreement whose performances can be apportioned into matched pairs, allowing recovery of the agreed price for completed units even though the whole was not finished.
Suspension versus termination
On an uncured material breach the injured party may first suspend, and only when the breach becomes total may it terminate and sue for all remaining performance.