This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A contract may provide in express terms that upon the happening of a specified condition subsequent the contract shall thereby be discharged. In such cases the happening of the condition discharges the contract.1 The termination of a contract by one party in accordance with a provision therein is not breach,2 and does not discharge the adversary party if the. termination was not by the terms of the contract to act as a discharge,3 and does not entitle the adversary party to damages.4 The question usually presented in such cases is as to the construction of the clause imposing such conditions subsequent. Thus a contract for street-car advertising to last until the termination of the right of the street-car company to maintain advertisements in its street-cars, has been held to terminate when the street-car company sells all its advertising interests.5 So an agreement between stockholders that on sale of stock by any party thereto, the others should have the first chance to purchase, the contract to terminate whenever either party should have disposed of the shares at the time owned by him, was held to terminate as to all the parties by the transfer by one stockholder of her stock to a person not a party to such contract, the other stockholders consenting.6 A clause requiring one party to give notice to the other of the facts operating as a condition subsequent into order to discharge the first party must be substantially complied with. Thus a provision in a building contract that the contractor shall for each day that he is in default pay to the owner five dollars as liquidated damages, but that if delays are due to default of other contractors, such contractor is discharged from liability thereof on giving written notice of such fact to the owner, the contractor is not discharged if he does not give such notice.7 Provisions requiring notice need, however, only to be complied with substantially. Thus A and B made a contract with X requiring A and B to give certain notice to X. A subsequently sold his interest to X. A notice from B alone was held sufficient.8 A provision requiring completion of a building contract by a certain time, only " provided there be no interference from labor strikes," does not excuse the contractor for delay caused by his employes' quitting work because the contractor did not pay them their wages.9 A contract providing for termination by one party if the other is in default cannot be terminated by one who is himself in default and whose default has caused the default of the adversary party. Thus in such a contract a bridge company did not pay for work done and materials delivered as by its contract it was bound to do. By reason of such default the contractors were unable to proceed. The bridge company cannot, on their default, exercise its option to terminate such contract.10 Thus under a provision to that effect a vendor may rescind a contract for the sale of realty if any objection is made to the title which he is unable or unwilling to remove,11 and he may exercise such option after the purchaser has sued for rescission subject to a liability for costs.12 Under a provision in a building contract allowing the owner under certain conditions to complete the contract at the expense of the contractor, his doing so does not discharge the contract further than is necessarily effected by such provision.13 On the one hand the contractor is entitled to the balance of the contract price above the cost of completion, as the owner cannot refuse payment on the ground that the contractor has not performed the contract on his part to be performed ;14 and on the other, he is liable for whatever damage his default has caused the owner.15 However, a provision for an architect's certificate of completion as a condition precedent to the contractor's recovery is waived thereby.16 Under a provision that if the contractor abandons his contract the owner is to complete it, its abandonment by the contractor does not discharge the owner.17 A provision inserted for the benefit of one party, authorizing him to terminate the contract in event of default by the other, cannot be taken advantage of by such other.18 A provision inserted for the benefit of the owner that, if emergency demands, the engineer in charge "may make alterations in any part of the work," cannot be invoked by the contractor to require such alterations to be made for his benefit.19 A provision for discharge for non-performance inserted in a land contract for the benefit of the vendor, and to be exercised at his option cannot be taken advantage of by the vendee.20 So a provision inserted for the benefit of the vendor, that default by the vendee in paying the purchase money note at maturity shall make the contract void, cannot be taken advantage of by the vendee.21 Thus default in payment of interest on school lands purchased by the defaulting vendee does not discharge him from liability for the purchase price if the state wishes to treat the contract as in effect, though a statutory provision makes such default work a forfeiture.22 The option to terminate may be intended for the benefit of the vendee or lessee. A provision, "In case no well is completed within thirty days from this date then this grant shall become null and void unless second party shall pay to first party thirty dollars each and every month in advance, while such completion is delayed," gives the option to the lessee either to keep the lease alive by making such payments, or to terminate it by refusing to make them.23
1 Eastern Advertising Co. v. Mc-Gaw, 89 Md. 72; 42 Atl. 923; Matter of Petition of the Argus Co., 138 N. Y. 557; 34 N. E. 388.
2 Sibley v. Life Association, 87 Ga. 738; 13 S. E. 838; Sirk v. Ela, 163 Mass. 394; 40 N. E. 183.
3 Lowell v. Ry., 90 Me. 80; 37 Atl. 869.
4 Merriman \ Machine Co., 96 Wis. 600; 71 N. W. 1050.
5 Eastern Advertising Co. v. Mc-Gaw, 89 Md. 72; 4& Atl. 923.
6 Matter of the Petition of the Argus Co., 138 N. Y. 557; 34 N. E. 388.
7 Feeney v. Bardsley, 66 N. J. L. 239; 49 Atl. 443.
8 Holt v. Silver, 169 Mass. 435; 48 N. E. 837.
9 McLeod v. Genius, 31 Neb. 1; 47 N. W. 473.
10 O'Connor v. Bridge Co., 95 Ky. 633; 27 S. W. 251, 983.
11 In re Deighton's Contract (1898) (C. A.), 1 Ch. 458.
12 Isaacs v. Towell (1898), 2 Ch. 285.
13 Christopher, etc., Co. v. Yeager, 202 111. 486; 67 N. E. 166; Hay v. Bush, 110 La. 575; 34 So. 692; Brown v. Baton Rouge. 109 La. 967; 34 So. 41; Crouch v. Gutman. 134 N. Y. 45; 30 Am. St. Rep. 608; 31 N. E. 271.
14 Charles v. Lumber & Mfg. Co., 22 Colo. 283; 43 Pae. 548; Arndt v. Keller, 96 Wis. 274; 71 N. W. 651.
15 New York v. Construction Co., 146 N. Y. 210; 40 X. E. 771.
16 Campbell v. Coon, 149 N. Y. 556; 38 L. E. A. 410; 44 N. E. 300.
17 Marcus Sayre Co. v. Burnz (N. J. Eq.), 26 Atl. 911.
18 Orr v. State, 56 Ark. 107; 19 S. W. 319; Shouse v. Doane, 39 Fla. 95; 21 So. 807; Lasher v. Ins. Co., 115 Ia. 231; 88 N. W. 375; Wester-velt v. Huiskamp, 101 Ia. 196; 70 N. W. 125; Bobbins v. Morgan. 56 Minn. 304; 57 N. W. 799; Vickers v. Commercial Co., 66 N. J. L. 9; 48 Atl. 606.
19 National Contracting Co. v. Commonwealth, 183 Mass. 89; 66 N. E. 639. ("May" does not here mean " shall.")
20 Wilcoxson v. Stitt, 65 Cal. 596; 52 Am. Rep. 310; 4 Pac. 629; Mason v. Caldwell, 10 111. 196; 48 Am. Dec. 330; Barbour v. Brookie, 3 J. J. Mar. (Ky.) 511; Niles v. Phin-ney, 90 Me. 122; 37 Atl. 880; Mea-gher v. Hoyle, 173 Mass. 577; 54 N. E. 347.
21 Westervelt v. Huiskamp, 101 Ia. 196; 70 N. W. 125.