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 condition, as we have seen,1 is an uncertain fact, which, as a result of the agreement of the parties, is to affect the legal effect of the contract. The condition, accordingly, in its more limited and accurate sense, does not contain any promise, either express or implied, on the part of either party, to bring about the happening of such uncertain fact.2 Accordingly, if the fact is a true condition, the happening or not happening of the event, as the case may be, may terminate the legal rights of the parties, and by the terms of the contract it may result in the substitution of other specified legal liabilities for those which were to exist if the specified condition had not happened ; but the happening of the condition alone is not a breach of a covenant and no right of action arises by reason thereof.8 If, however, the condition is broken, the party in whose favor such condition is exacted may treat the rights of the adversary party as terminated or suspended in accordance with the terms of the contract, and he is not remitted to a right of action for damages.4 A covenant, on the other hand, is an agreement of one of the parties to the contract to act or to forbear to act in a certain specified way.5 If the party who has thus agreed to act or to forbear to act breaks his covenant, and the covenant is a part of an enforceable contract, a legal liability of some sort arises upon such breach,6 unless the happening of other and further events since the contract was made, have operated as a discharge thereof.7 The covenant, in its simplest form, is therefore merely a promise by one party to act or to refrain from acting in a certain way, and the consequences of his breaking such promise are fixed by the law and not by the express agreement of the parties.
5 See Redman v. Aetna Fire Ins. Co., 49 Wis. 431, 4 N. \V. 591.
6 See Sec. 2021 et seq.
1 See Sec. 2574.
2 Green County v. Quinlan, 211 U. S. 582, 53 L. ed. 335 ["condition" used as meaning "covenant," affirming, Quinlan v. Green County, 157 Fed. 33]; Diepen-brock v. Luiz, 159 Cal. 716, L. R. A. 1915C, 234, 115 Pac. 743; Cavanagh v. Iowa Beer Co., 130 La. 236, 113 N. W. 856.
"The attitude of the parties, indicated by their respective claims, leads us, in the first place, to consider the meaning of the terms 'condition' and 'covenant' and to ascertain their significance as bearing upon the present controversy.
"Numerous authorities might be cited in which a 'condition' is defined to be something inserted in a deed for the benefit of the grantor giving him the power, on default of performance, to destroy the estate if he will and revest it in himself or his heirs. A 'covenant' has been defined to be an agreement or consent of two or more by deed in writing, sealed and delivered, whereby either one of the parties doth promise to the other that something is done or shall be done in the future. While there is more or less variation in the language employed by different courts in defining and giving effect to these terms the decisions are, in substance, practically the same. Some of the authorities point out various terms and expressions having a well-settled meaning and which are clearly and indisputably indicative of the intent of the parties to the instrument to create a condition or enter into a covenant as the case may be.
"A more extended discussion of these authorities would not be profitable in view of the fact that we find it to be the consensus of opinion that no particular form of expression is essential to the creation of a condition, but that if it is manifest from the terms of the instrument that a condition was intended, the estate will become defeated upon a breach thereof. In Fowlkes v. Wagoner, 46 S. W. (Tenn.) 586, the court said, a condition 'may be created by any words ■which show a clear, unmistakable intention on the part of the grantor or devisor to create an estate on condition, regard being had to the whole of the deed or will in which they occur.' It has even been held that the same words may create either a covenant or a condition depending upon the intention of the parties as such intention may be determined from the context. Chapin v. Harris, 8 Allen, 594; Tiffany on Landlord and Tenant, Vol. 2, p. 1363, Sec. 194. The principle therefore upon which this question must be determined is well-settled. The authorities are briefly and correctly summarized in the note to be found in 1 L. R. A. 381, as follows: 'According to modern authorities a clause only operates as a condition when it is apparent, from the whole scope of the instrument, that it was intended to operate so, or in other words, there is no technical rule, but courts are in each case to ascertain the intent and give the instrument effect accordingly.' " Perkins v. Kirby, 3.1 R. I. 84, 88, 85 Atl. 648.
3 Way v. Greer, 196 Mass. 237, 81 N. E. 1002; Schwab v. Baremore, 95 Minn. 295, 104 N. W. 10.
4 Diepenbrock v. Luiz, 159 Cal. 716, L. R. A. 1915C, 234, 115 Pac. 743; Carper v. United Fuel Gas Co., 78 W. Va. 433, L. R. A. 1917C, 171, 89 S. E. 12.
5 Mercantile Trust Co. v. Hensey, 206 U. S. 298, 51 L. ed. 871; Quinlan v. Green County, 157 Fed. 33; Mackenzie v. Trustees, 67 N. J. Eq. 652, 3 L. R. A. (N.S.) 227, 61 Atl. 1027; Braddy v. Elliott, 146 N. Car. 578, 16 L. R. A. (N.S.) 1121, 60 S. E. 507.
6 Cavanagh v. Iowa Beer Co., 136 Ia. 236, 113 N. W. 856. See ch. LXXXIV.
7 See ch. LXXVIII, ch. LXXIX and ch. LXXXV.