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 act which the parties select as a condition may undoubtedly be an act which is to take place in the future.1 Whether it may be an act which has taken place in the past or which is taking place at the very moment that the promise is made, but the outcome of which is unknown to the parties to the contract, is a question upon which there has been a considerable amount of discussion in other systems of law. but very little in our own. In Roman law, a fact which had already occurred, or which was occurring when the promise was made, could not be regarded as a condition in the true sense of the term.2 It is evident that such an event has happened when the contract is made, and that accordingly the contract is actually unconditional if the condition has been performed in accordance with the terms of the contract, or else the promise never took effect by its own terms, in case the condition has been broken so as to avoid the contract by its own terms. At the same time, the parties to the contract do not know how the event transpired. Where no element of fraud or mistake enters in, compromises of rights which are asserted in good faith are regarded as supported by sufficient consideration,3 and if the parties know that the subject-matter may have ceased to exist, and enter into the contract, agreeing to take chances upon its continued existence,4 the contract is valid although such subject-matter had in fact ceased to exist. Since the bona fide belief of the party in the existence and validity of his claim, or in the existence of the subject-matter, is sufficient, it is clear that the parties may make their contract turn upon the actual outcome of an event which has already happened, but of the result of which they are as yet in ignorance. The only real difficulty is one of name. Is it proper to say that such a contract is a contract upon a condition; or is it better to say that it is, on the one hand, an absolute contract from the beginning, and on the other hand, that it never had any legal effect Occasionally it has been said that a true condition must look to the future.5 On the other hand, the fact that the event is present or past does not prevent the courts from calling it a condition.6 The fact that at our law questions of this sort are usually questions of mere name, and that as a rule no legal rights depend upon the determination thereof, is probably the reason why this subject is discussed so little at common law. Whether such an event is a true condition or not, its effect on the validity of the contract is the same.7 The practical difference arises when the right of the parties to recover in quasi-contract is involved,8 and the courts usually determine this question without considering the nature of such an event as a true condition.
1 See 12506.
2 "The following subsidiary provisions are not conditions in the juristic sense:
1. The condicio in praesens vel in praeteritnm collata; for example, A promises 1000, si Titius consul fuit (if Titius has been consul). This transaction is conditional in outward form, it is true; but, on the other hand, it is unconditional in its true nature. Here there is no objective state of uncertainty, for it is objectively certain at the time of concluding the transaction whether Titius was consul or not. If he was consul, the legal operation takes effect as soon as the transaction is concluded, and if he was not consul the transaction is without legal effect from the beginning." * * * Czyhlarz, Manual of the Institutes of Roman Law, Sec. 21.
3 See Sec. 612 et seq.
4 See Sec. 658.
5 Metropolitan Life Ins. Co. v. Goodman, 10 Ala. App. 446, 05 So. 449.
"Past or existing facts or states of things may, when unknown to both parties to the contract, form the basis of a valid provision in the contract whereby there is to be no contract in the event they do exist, and vice versa; but the principle upon which such a provision is to be upheld is that of mutual mistake of the parties in supposing such facts or states of things not to exist when they do exist. * * * But where the past or existing fact, act, or state of things is known by one of the parties, and the other knows he knows, then only a warranty or representation by the party knowing of such facts, acts or states of things, or some fraudulent concealment by him, could relieve the other party of the duty and necessity of ascertaining for himself, on his own responsibility, before he concluded the contract, such fact, act or event, if he deemed it material or important to the consideration, and of protecting himself by declining, on account of its existence, to enter into the contract at all He can not, in the absence of such warranty, representation, or concealment, omit to do so, and enter into the contract and assume, for a valuable consideration, Its obligations and at the same time protect himself from his own negligence by inserting in the contract a valid condition whereby his obligation is to be void, but the consideration paid him therefor is to remain his, unless a fact, which does exist, does not exist. Such a condition, under such circumstances, would be void and must fall, because the party for whose benefit it was inserted knew, or is charged with knowing, at the time he entered into the contract and accepted the consideration from the other party that the condition was absolutely inconsistent with, destructive of, and repugnant to, the obligation which by the contract he assumed. In such case the condi-tion and not the contract falls. • • • A party can not avoid a contract on account of facts which were known to him at the time he entered into the contract, or which he knew then that he could ascertain from the other party, unless relieved of the duty by the fraud or warranty of the other party. Unless so relieved, he is charged with a knowledge of such facts, and can not, because of their existence, exempt himself from liability under the contract A condition so providing, if not predicated upon a warranty, is void, because repugannt to the obligation at the very inception of the contract." Metropolitan Life Ins. Co. v. Goodman, 10 Ala. App. 446, 454, 65 So, 449. 6 See |2594.