This section is from the book "A Commentary On The Law Of Contracts", by Francis Wharton. Also available from Amazon: A Commentary On The Law Of Contracts.
A third party may be made the arbiter of the compliance with a condition.5 Thus, an agreement to loan money on mortgage, provided the property to be mortgaged receives a certain valuation, is conditioned on the furnishing of such a valuation;6 an agreement for the price of transportation to be fixed by the quartermaster is conditioned on the decision of the quartermaster;7 an agreement to pay a price to be determined on measurement by a particular person is conditioned on measurement by such person;1 and an agreement to pay insurance may be conditioned on a certificate being obtained as to the loss from a neighboring magistrate.2 An agreement, also, for the sale of shares in a corporation may be made conditional on the approval of the sale by the directors, though this is dependent upon the charter of the company; and unless this power is given to the directors, their consent to a bona fide transfer of the stock will be compelled.3 - When the agreement is to pay a price to be fixed by A., the price, when fixed, is as much part of the contract as it would have been if fixed by the parties themselves.4 When, also, P., on leasing V.'s railroad, agrees to pay V.'s debts when duly adjusted and audited, there can be no suit on this agreement when V. refuses to make such an adjustment, even though the creditors of V. have obtained a judgment for their particular.debts.5 - If an agreement is made for a sale at a specific price, provided that if a third party decide in a particular way the price shall be higher, and the third party, without fault of the buyer, refuses to interfere, the property must be delivered at the price fixed in the agreement.6 When the agreement, also, is Third party may be made arbiter of compliance with condition.
1 Andrews v. Belfield, 2 C. B. N. S. 779; Stadhard v. Lee, 3 B. & S. 364; 2 Pars. on Cont. 59.
2 Treloar v. Bigge, L. R. 9 Ex. 151; Lehmann v. McArthur, L. R. 3 Ch. 496.
3 Coles v. Turner, L. R. 1 C. P. 373.
4 Braunstein v. Ins. Co., 1 B. & S. 782.
5 Beni. on Sales, 3d Am. ed. sec 574;.
Worsley v. Wood, 6 T. R. 720; Ames v. Vose, 71 Me. 17; Read v. Decker, 67 N. Y. 182; Nofsinger v. Ring, 71 Mo. 149. As to approval of architect, see infra, sec 594; of engineer, Bean v. Miller, 69 Mo. 384.
6 Leake, 2d ed. 639; Thurnell v. Bal-birnie, 2 M. & W. 786.
7 Kihlberg v. U. S., 97 U. S. 398.
1 Mills v. Bayley, 2 H. & C. 36. Where a condition in a sale of a horse was that "horses warranted . . . not answering the warranty, must he returned by 5 o'clock of the day after the sale; shall then be tried by a person to be appointed by the auctioneer, and the decision of such person shall be final;" it was held that a plaintiff who had neglected to return within the period limited, so that the arbitrament could be made, could not subsequently bring suit on the warranty. Hincliffe v. Barwick, L. R. 5 Ex. D. 177.
2 See Worsley v. Wood, 6 T. R. 710; Columbia Ins. Co. v. Lawrence, 10 Pet. 513; Leadbetter v. Ins. Co., 13 Me. 265; Turley v. Ins. Co., 25 Wend. 374.
3 Weston's case, L. R. 4 Ch. 20.
4 Benj. on Sales, 3d Am. ed. sec 87; Fuller v. Bean, 34 N. H. 301; Nutting v. Dickinson, 8 Allen, 540; McCandlish v. Neuman, 22 Penn. St. 460; Cunningham v. Ashbrook, 20 Mo. 553.
5 Bills v. R. R. Assoc, 7 Baxt.(Tenn.) 595.
6 In Bogden v. Marriott, 2 Bing N. C. 473, the doctrine in the text was pushed to its extremest limit. An agreement between A. and B. provided that A. should sell a horse to B. for one shilling, provided that if, to the satisfaction of C, the horse should trot eighteen miles in an hour, B. should pay the price of £200. C. refused to attend without any fault of the buyer. It was held that A. was obliged to deliver the horse to B. for one shilling; and Tindal, C. J., said that this "was a condition which the defendant should have shown to have been performed, or that the performance was prevented by the fault of the opposite side." to sell at a price to be fixed by A., and A. refuses to fix the price, without any fault of either party, then, as the fixing the price is a condition precedent of the sale, there is no sale.1 If, in the case of a sale of real estate, the appraiser is ready to enter and make the appraisement, the court will order the vendor to allow him to enter and appraise, so that specific performance can be decreed.2 When an appraiser refuses to act on a sale of goods whose price is to be fixed on his appraisement, this also is a condition precedent to a sale; though if the buyer obtain possession of and retain the goods after such non-appraisement, he may become liable on an implied contract for their value.3 - If the contract is to be performed to the satisfaction of another, the decision of such person, if honest, is final, no matter how unreasonable.4 If, however, there is collusion, this entitles party defrauded to rescind.6 Thus, in a recent English case,6 the evidence was that the defendants agreed with the plaintiff's to lay a cable, the payment to be in part on the beginning of the work, and in part in twelve instalments, payable on certificates by the plaintiffs' engineer. The engineer, who was employed to lay other cables for the defendants, agreed with them to lay this cable also for a price to be paid him by them. It was held that this agreement was a fraud, entitling the plaintiffs to have their contract rescinded, and to have the money they had paid under it returned. .sec 594. Building contracts often contain the provision that the owner shall not be liable to the builder until the work has been approved by the architect employed; and this provision, when the builder takes the work subject to it, and when the architect acts as an independent arbiter between the parties, will.
Building contracts may be made dependent on approval of architect.
1 Leake, 2d ed. 640; Emery v. Wase, 8 Ves. 505; Milnes v. Gery, 14 Ves. 400; Thurnell v. Balbirnie, 2 M. & W. 786; Firth v. R. R., L. R. 20 Eq. 100. See Anderson v. Wallace, 3 Cl. & F. 26.
 
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