Per Gwilym Davies, "Conditional Contracts for the Sale of Land in Canada"** (1977) 55 Can. Bar Rev. 289:

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Gervase Shaw
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1 Contracts (O'Byrne) Contingent Agreements (General Introduction) I. Objectives: to see the extent to which the Treitel analysis of contingent agreements is followed by Canadian courts; to analyze what the parties' obligations are, if any, after the making of a conditional agreement, but prior to the satisfaction of the condition or the expiry of the deadline set for its satisfaction; to determine what a "true" condition precedent is; and to consider how subsequent courts have handled theturney case. II. Warning: Per Gwilym Davies, "Conditional Contracts for the Sale of Land in Canada"** (1977) 55 Can. Bar Rev. 289: The development of law in Canada with respect to conditional contracts for the sale of land has followed a strange course and has produced strange results and in so doing appears to have departed both from previously decided authority and from good sense...the conclusion which has been reached is that the law respecting conditional contracts for the sale of land suffers from loose use of terminology and imprecise conceptualization on the one hand and undue reliance upon formulae and abstract conceptualization on the other. **this article is highly recommended. III. What is a contingent agreement? a contingent agreement is also called a conditional agreement per Treitel, an agreement is conditional if its operation depends on an event which is not certain to occur. Will the event occur?

2 2 IV. Some distinctions per Treitel A. CONTINGENT AND PROMISSORY CONDITIONS 1. condition as an event (a contingent condition) VERSUS condition as a term (a promissory condition) (a.) condition as an event which neither party undertakes to bring about A agrees to work for B and B is to pay A the sum of 50 pounds if it rains tomorrow. Per Treitel: Here, the obligations of both parties are contingent on the happening of the specified event which may therefore be described as a contingent condition. (b.) condition as a term where one party s duty to perform is contingent on the other party performing her undertaking A promises to work for B at a weekly rate, payable at the end of each week. Per Treitel: Here, the contract is immediately binding on both parties, but B is not liable to pay until A has performed his promise to work. Such performance is a condition of B s liability and, as A has promised to render it, the condition may be described as promissory. This part of the course concerns contingent conditions (see (a.) above). Our next chapter concerns promissory conditions (see (b.) above). 2. Conditions precedent and conditions subsequent Per Treitel: Contingent conditions may be precedent or subsequent. A condition is precedent if it provides that the contract is not to be binding until the specified event occurs. It is subsequent if it provides that a previously binding contract is to determine on the occurrence of the event: e.g. where A contracts to pay an allowance to B until B marries. [footnotes deleted.] See Dawson Helicopter

3 3 Per SKO: be careful. Don t assume that presence of an unfulfilled condition precedent means the absence of a binding agreement. B. DEGREES OF OBLIGATION: CONDITIONS PRECEDENT Per Treitel: an agreement which is subject to a contingent condition precedent is not fully binding until the specified event occurs; nor does either party undertake that it will occur. That said, an agreement subject to such a condition may impose some degree of obligation on the parties or on one of them. What are the possibilities per Treitel? 1. Before the event occurs, each party is free to withdraw. EXAMPLE: agreement for sale of a patent is executed but the parties also agree that it should "not be the agreement" unless a third party approved of the invention. No agreement UNTIL approval. See Murray, cited in Weibe. **Put another way, we have a condition precedent going to the creation of the obligation as opposed to one the fulfilment of which triggers the duty to perform. 2. Before the event occurs, main agreement is not binding but, so long as the event can still occur, one or both of the parties CANNOT withdraw. EXAMPLE: A sells land from B subject to financing. A cannot withdraw before the time fixed for completion; he was bound to wait to see whether B could arrange the loan. See Smith v. Butler, [1900] 1 Q.B Before the event, the main agreement is not binding but that in the meantime, the parties must not prevent occurrence of the event. EXAMPLE: Football player is transferred. He is to be paid part of his fee immediately and the balance upon scoring 20 goals. He is cut before he has the change to score the goals. Held: that the team was in breach as it had not given him a reasonable opportunity to score the goals. See Bournemouth discussed in Treitel. 4. Before the event occurs, the main agreement is not binding but one of the parties undertakes to use reasonable efforts to bring about the event without undertaking that those efforts will succeed. EXAMPLE: Hargreaves Transport Ltd. v. Lynch, [1969] 1 W.L.R Land is sold subject to the condition that the purchaser should obtain planning

4 4 permission--he is bound to make reasonable efforts to get the permission but isn't liable for failing. The principal obligation (to buy and sell) will not take effect if planning permission is not obtained. But note that there is an implied subsidiary promissory obligation to make reasonable efforts. **the foregoing pages must be read in light of Turney. VI. Conditions precedent to obligation vs. conditions precedent to performance Wiebe v. Bobsien, quoting Corpus Juris Secundum: A condition precedent may relate to the binding effect of an agreement or to the duty to perform an existing contract. The existence of such a condition depends upon the intent of the parties as gathered from the words they have employed, and it will be interpreted according to the general rules of construction. VII. The Let s Make a Deal summary of conditions precedent DOOR #1: CONDITION PRECEDENT TO CREATION [FORMATION] OF THE CONTRACT [OBLIGATION] Example: I ll buy your house if I like it No binding agreement results from this because the condition precedent is Illusory it is based on whim, fancy, or dislike. It has no objective content and therefore cannot be enforced. DOOR #2: CONDITION PRECEDENT TO THE DUTY TO PERFORM THE PRIMARY CONTRACTUAL OBLIGATIONS A binding agreement results but whether the primary contractual obligations (example: to buy and sell a house subject to selling one s own residence per Wiebe) depends on whether the condition precedent is fulfilled. Such agreements can have subsidiary obligations breach of which is actionable o Wiebe has to make bf efforts to sell his house o Bobsien has to wait and see if Wiebe fulfills the CP VIII. What is a True Condition Precedent? See Turney: But here there is no right to be waived. The obligations under the contract, on both sides, depend upon a future event, the happening of which depends entirely on the will of a third party the Village Council. This is a true condition precedent an external condition upon which the existence of the obligation depends. IX. Overhead:

5 5 DOOR #1: CONDITION PRECEDENT TO CREATION [FORMATION][ OF THE CONTRACT [OBLIGATION] Example: I ll buy your house if I like it No binding agreement results from this because the condition precedent is Illusory it is based on whim, fancy, or dislike. It has no objective content and therefore cannot be enforced. DOOR #2: CONDITION PRECEDENT TO THE DUTY TO PERFORM THE PRIMARY CONTRACTUAL OBLIGATIONS A binding agreement results but whether the primary contractual obligations (example: to buy and sell a house subject to selling one s own residence per Wiebe) depends on whether the conditionn precedent is fulfilled. Such agreements can have subsidiary obligations breach of which is actionable Where does a 'true' condition precedent fit in? See Turney for a definitionn of a true CP: "an external condition upon which the existence of the obligation depends. Until the event occurs there is no right to performance on either side."

SELF-CANCELING INSTALLMENT SALES AGREEMENT

SELF-CANCELING INSTALLMENT SALES AGREEMENT THIS SELF-CANCELING INSTALLMENT SALES AGREEMENT (the Agreement ) is made this day of, 1999, between [CLIENT], residing at [CLIENT ADDRESS] (the Buyer ) and [SELLER]