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Breach of Contract: A Look at Condition Precedent Clauses

Business and Commercial DisputesLitigation By Harvey Binnall PLLC - 2018/09/28 at 11:32pm

If you have sustained losses due to a breach of contract, then — depending on the particular structure of the contract — you may find that the defendant attempts to avoid liability by arguing that you failed to satisfy some condition precedent necessary for the contract obligations to trigger.

Given the complications typical of this defense (and various other defenses that may be asserted), it’s important that you get in touch with a qualified attorney who has the specialized commercial litigation experience necessary to effectively advocate on your behalf.  Here at Harvey & Binnall, PLLC, our attorneys can represent your interests in a dispute.  Contact us to learn more about how we can help.

What is a Condition Precedent and How Does it Work?

A condition precedent is a clause in a given agreement that is required to trigger certain contract obligations.  If you fail to satisfy a condition precedent to your contract, then it may allow the defendant (the breaching party) to shield themselves from liability — the defendant can reasonably argue that they did not actually commit breach by violating any contractual obligations.  Simply put, the basis of their defense is that the contractual obligations did not trigger, and therefore, could not have been violated.

For example, suppose that you are a product manufacturer and you agree to a bulk purchase order contract with the buyer.  The timely delivery of the goods in question is a “condition precedent” written into the contract — in other words, if you fail to deliver the goods in a timely manner (designated by a specific date and time in the contract), then the buyer’s obligation to perform their contract obligations and purchase/accept the goods will not trigger.

Now, you are several hours late for the delivery.  The buyer refuses to accept the delivery and you sue for damages.  The buyer may argue that they cannot be held liable as you failed to satisfy the condition precedent.  You could, ostensibly, argue that your failure to satisfy the condition was immaterial, as the delay was minor and had no appreciable effect on the defendant’s business interests.  In all likelihood, however, the buyer would be able to avoid liability for breach.

Interfering With the Occurrence of a Condition Precedent

It’s worth noting that a breaching party cannot actively create the circumstances that lead to the condition precedent defense — basically, the breaching party cannot shield themselves from liability for your “failure to satisfy a condition precedent” if they engaged in activities that interfered with your ability to satisfy the condition precedent.

Let’s return to the previous delivery example for clarity.

Suppose that you were delayed in making the delivery of goods.  The buyer attempts to avoid liability by arguing that you failed to satisfy the condition precedent of “timely delivery.”  Further investigation reveals that the buyer actually wanted to terminate the contract, and intentionally interfered with your ability to make a timely delivery so that they could avoid liability for their eventual breach.  Perhaps the buyer called you regularly and demanded that you alter and revise the items at-issue, thus delaying the timely manufacture and delivery of the goods.

Given those circumstances, the defendant would not be entitled to make use of the condition precedent defense.

Request an Appointment With an Experienced Alexandria Commercial Litigation Lawyer

Harvey & Binnall, PLLC is a boutique commercial litigation firm based in Alexandria, VA, and serving clients throughout the Virginia, Maryland, and DC metro areas.  We have extensive experience representing individuals and businesses in a range of contract disputes (in state and federal courts), helping them secure the damages they’re owed pursuant to the law of the applicable jurisdiction.  We understand the various tactics employed by defendants in an effort to avoid or otherwise minimize their liabilities, and how best to approach litigation so as to strengthen our client’s arguments and undermine those of the opposition.

Call (703) 888-1943 or submit a message online to request an appointment with an experienced Alexandria commercial litigation lawyer at Harvey & Binnall, PLLC today.