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How Contract Conditions are Excused

How Contract Conditions are Excused
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  • 0:06 Contract Conditions
  • 1:06 Excuse of Conditions
  • 1:49 Anticipatory…
  • 3:14 Waiver & Impossibility
  • 4:57 Subatantial…
  • 6:30 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

A contract condition is an act or an event that affects the parties' contractual duties. A condition determines the parties' obligations, but sometimes a condition can be excused. This lesson explains the different ways that a contract condition can be excused.

Contract Conditions

Our business world is filled with contracts. A contract is a written or spoken agreement that is legally binding. All valid contracts create a mutual obligation. A mutual obligation means that each of the parties is obligated to perform a duty under the contract.

The contract conditions affect and determine the parties' contractual obligations. A contract condition is a qualification that is placed on an obligation. It is something that must occur before, during or after a contractual duty.

For example, let's say that I promise to fix the flat tire on your car if you'll let me borrow your car tomorrow evening. This is an exchange of obligations, and a valid oral contract. Notice, though, that this agreement has a condition. I'm not obligated to fix the tire unless you agree to let me borrow the car.

Excuse of Conditions

Sometimes a condition can be excused. This means that the condition didn't occur, but the other party is still obligated to perform a contractual duty.

Let's look again at our scenario. I've promised to fix your flat tire if you'll let me borrow the car tomorrow evening. You have to agree to let me borrow the car before I'm obligated to fix the flat tire. This is the contract condition. If it's excused, I'm obligated to fix the flat tire even though you didn't agree to let me borrow the car.

Ways a Condition Can Be Excused

There are many ways in which a contract condition can be excused. These are some of the more common excuses:

1. Anticipatory repudiation can work to excuse a contract condition when one party renounces his or her intention to perform that party's contract obligation. Let's look again at our prior scenario. I promise to fix the flat tire on your car if you'll let me borrow your car tomorrow evening. These are contract conditions that are dependent on one another. After we agree, you announce that you have a date tomorrow evening and will be using your car. You've renounced your intention to let me use your car. I can now assume, or anticipate, that you won't be performing your condition. My condition, to fix the flat, is now excused.

2. Prevention works to excuse a contract condition when one party wrongfully prevents the other party from performing his or her condition. Let's say we agree that I'll fix the flat on your car, and you'll let me borrow the car tomorrow evening. I gather my tools and supplies and go to the driveway to fix your flat. I'm willing and able to perform my condition; however, you already fixed it. The condition that I fix the flat can be excused, because you've purposefully and wrongfully prevented the occurrence of the condition. You'll still have to uphold your contractual duty to let me borrow the car.

3. Waiver can work to excuse a contract condition when a party waives a contract condition that is meant to benefit that party. This type of waiver is a voluntary relinquishment of a right. Let's look at our same scenario again. We agree that I'll fix the flat on your car, and you'll let me borrow the car tomorrow evening. My fixing your tire is a condition to your letting me borrow the car. My fixing the tire is a benefit to you. Therefore, you can waive this condition. Sometimes, a party can withdraw a previous waiver and reinstate the contract condition. However, a party can't withdraw a waiver if the other party relied on the waiver to his or her detriment. This means that you can't restore the condition if I relied on your waiver and my reliance caused a harm or loss to me.

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