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.
Another reason for the confusion between conditions and covenants is the fact that they shade off from the clearest and most extreme type of the condition, which contains no element of a promise, through intermediate stages, into the clearest and most extreme type of a covenant, the breach of which may give rise to an action for damages, but which has no effect whatever upon the validity or performance of the contract.1 The express condition, as the term is frequently used, is one which is stated in so many words in the contract itself.2 There are, however, cases in which the contract taken as a whole shows that its validity or its effect is conditioned upon the happening or not happening of some specific event, although such intention has to be taken from the contract taken as a whole, and it is not expressed in any single clause or sentence.8 While such covenants are frequently referred to as implied contracts, they are not implied contracts in the proper sense of the term, but they are rather covenants which are part of express contracts and which are deduced from such express contracts by the ordinary rules of construction and interpretation. A covenant which is possibly an illustration of this class is one which from its very terms can be performed only if some other event happens.4 Conditions of this sort are sometimes referred to as implied conditions. They bear the same relation to conditions which are set forth in so many words in the contract itself, that covenants which are not set forth in so many words, but which are seen to be clearly intended by the parties when the contract is read as a whole in the light of surrounding circumstances, bear to the contract from which the intention to include such covenant is inferred.1
In cases of this sort, the courts are in a dilemma. They must either construe such act as a condition upon which the covenant is based, or they must assume that the party to such a covenant intended to bind himself to perform something which upon the face of the contract can not be performed in case such act does not happen. In cases of this sort, the courts prefer to treat such a covenant as conditional,6 unless it appears clearly that the prom-isor intends to assume an unconditional liability. Wherever it is possible, a reasonable, construction will be placed upon such a covenant.7
1 See ch. LXXXV.
2 See Sec. 2574.
3 Raynay v. Alexander, Yelv. 76b; Lapp-Gifford Co. v. Muscoy Water Co., 166 Cal. 25, 134 Pac. 980; Wm. B. Hughes Produce Co. v. Pulley, 47 Utah, 544, L. R. A. 1916D, 728, 155 Pac. 337.
4 Raynay v. Alexander, Yelv. 76b;
Coombe v. Greene, 11 M. & W. 480; Western Lime & Cement Co. v. Copper River Land Co., 138 Wis. 404, 120 N. W. 277.
5 See Sec. 1434 et seq. and 2042; Wm. B. Hughes Produce Co. v. Pulley, 47 Utah, 544, L. R. A. 1916D, 728, 155 Pac 337.
In addition to these meanings, the term condition or implied condition is frequently used of facts which operate as a discharge of liability;8 and as applied to covenants, the term condition or implied condition is used of covenants, the breach of which operates as a discharge of the contract in part or in whole.9 In many cases of this sort it is a sheer fiction to call the promise a condition. The parties made their promises with a view to performance, and the question of the effect and consequence of breach in all probability never entered the minds of either party. In cases of this sort, where the parties have overlooked the possibility of breach, and breach has occurred, the law attempts to adjust the rights of the parties in accordance with its own ideas, which, it will be seen, have varied from time to time.10 Even if breach of a covenant operates as a total discharge of the contract, it should not be called a condition if the parties did not anticipate the possibility of such breach, and did not make provision therefor. In this, as in other cases, confusion has no doubt arisen because of the fact that wherever the parties make specific provision for the consequences of a breach, full effect must be given to such provision; and frequently the parties have provided in express terms that breach of one or more of the covenants of the contract shall operate as a termination of all liability thereunder.11
If the provision in question is material and vital, it may make little difference in the particular case whether it is a condition or covenant, since even if it is merely a covenant, the breach thereof may operate as a discharge of the remaining covenants on the part of the adversary party.12 If, however, the provision deals with some immaterial matter, it is of the greatest importance to determine whether such provision is a true condition or a covenant; since if it is a covenant, the breach thereof will not operate as a discharge of the contract,13 while if it is a true condition the breach thereof may operate as a discharge of the contract, even though the event is immaterial.14
6 See cases cited in note 4, this section. 7 See Sec. 2053. 8 See Sec. 2446. 9 See ch. LXXX1V. 10 See ch. LXXXIV.
11 See Sec. 2578.
12 Whether it will have this effect or not will depend in part on the relation of the covenant which is broken, to the remaining covenants of the contract. See ch. LXXXIV.