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.
The practice, whether erroneous or not, of using the term "condition" as applicable to present or past facts, as well as to. future facts,1 has led to a confusion between conditions and representations of different sorts. The confusion has been increased by the fact that in many cases the truth of the representation is expressly made a condition upon which the contract is to take effect, or upon which the contracts are to be discharged.2 Except in cases in which a representation is made a condition by express terms, a representation, whether fraudulent or innocent, is to be distinguished sharply from a condition. The representation in the proper sense of the term is not a part of the contract, but is a preliminary matter of inducement thereto by which one of the parties was induced to enter into such contract.3 On the other hand, the condition is a term of the contract itself.4 Another important reason for distinguishing between the condition and the representation is that the falsity of the representation is ordinarily inoperative unless the representation concerns a material fact.5 If the representation concerns an immaterial fact, its falsity has no effect upon the validity of the contract, even if such false representation were made fraudulently.6 On the other hand, if a fact is made a condition by the express terms of the contract, the legal effect of the contract depends upon the happening or not happening of the stipulated event, without any regard to its materiality.7
12 Marinovich v. Kilburn, 153 Cal. 638, 96 Pac. 303.
13 Marinovich v. Kilburn, 153 Cal. 638, 96 Pac. 303.
14 Marinovich v. Kilburn, 153 Cal. 638, 96 Pac. 303.
1 See Sec. 2954 et seq.
2 See Sec. 222 and 2578 et seq.
3 Bryant v. Modern Woodmen, 86
Neb. 372, 27 L. R. A. (N.S.) 326, 125 N. W. 621. See Sec. 217 et seq.
4 See Sec. 2574.
5 Cunat v. Supreme Tribe, 249 III. 448, 34 L. R. A. (N.S.) 1192, 94 N. E. 925; Bryant v. Modern Woodmen, 86 Neb. 372, 27 L. R. A. (NS.) 326, 125 N. W. 621. See Sec. 308 et seq. and Sec. 365 et seq.
Whatever the rule may be as to the effect of innocent misrepresentations,8 the substantial inaccuracy of statements, the truth of which is made the condition of a contract, will defeat the contract, whether the party who made such statements knew that they were false or not.9