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.
There is an additional confusion in terms, which arises in cases in which there is a promise to perform at a future time, or upon the happening of a future event. Even where the promise is to perform at a future definite time, it is sometimes said that the expiration of such time is a condition upon which the right to performance depends. If failure to perform by a certain time is made a condition subsequent,1 as in cases in which time is of the essence of the contract,2 lapse of time without performance may be the event which is the condition subsequent to the contract or to certain covenants thereof. Under a provision to the effect that certain classes of defenses can not be set up after a certain time, such provision, if not invalid on the ground of public policy,2 is analogous to a condition subsequent, and the lapse of the specified time prevents the use of such defense.4
In other cases, it is comparatively rare at the present time to find provisions for postponing performance for a definite period of time, classed as conditions; but when the performance is to take place on the happening of a future event, instead of at the end of a definite period of time, questions of greater difficulty are presented.5
42 See Sec. 222.
1 Colorado. Clason v. Mutual Life Ins. Co., - Colo. - , 184 Pac. 296.
Iowa. Collman v. Equitable L. Assur. Soc., 133 Ia. 177, 8 L. R. A. (N.S.) 1019, 110 N. W. 444; Exchange Bank v. Illinois Life Ins. Co., - Ia. - , 174 N. W. 260.
Nebraska. Bogue v. New York Life Ins. Co., - Neb. - , 173 N. W. 501.
North Dakota. Sunshine Cloak & Suit Co. v. Roquette, 30 N. D. 143, L. R. A. 1916E, 932, 152 N. W. 359.
Ohio. Ohio Farmers' Ins. Co. v. Wilson, 70 O. S. 364, 71 N. E. 715 [distinguishing, Ins. Co. v. French, 30 O. S. 240].
Oregon. Hinkson v. Kansas City Life Ins. Co., - Or. - , 183 Pac. 24.
Pennsylvania. Shuman v. Main, Beaver & Black Creek Mutual Fire Ins. Co, - Pa. St. - , 108 Atl. 265.
Utah. William B. Hughes Produce Co. v. Pulley, 47 Utah 544, L. R. A. 1916D, 728, 155 Pac. 337.
2 See Sec. 2103 et seq.
3 Reagan v. Union Mut. L. Ins. Co., 189 Mass. 555, 2 L. R. A. (N.S.) 821, 76 N. E. 217.
See Sec. 727 and 732 et seq.
4 Mutual Reserve Fund L. Asso. v. Austin, 142 Fed. 398, 6 L. R. A. (N.S.) 1064; Great Western L. Ins. Co. v. Snavely, 206 Fed. 20, 46 L. R. A.
On the one hand, the event may be one which is bound to happen, although the time at which it is to happen may not be capable of being foreseen. The stock illustration of this is the promise which is to be performed upon the death either of one of the parties to the transaction or of a third party.6 An agreement to pay the consideration for a conveyance to the grantor's grandson when he reaches the age of twenty-one, is not discharged by his death before reaching such age, but his legal representatives may recover the amount when such grandson would have been twenty-one had he lived.7 While events of this sort are sometimes called conditions, they are not ordinarily regarded as conditions in the true sense of the term, since they merely fix the time for performance and since they never operate to prevent performance.8
The event upon which performance is due, may, on the other hand, be one which may never happen. In cases of this sort, there is more justification for referring to such an event as a condition than in the preceding cases. At the same time in contracts of. this sort, the event does not affect the validity of the contract, nor does it postpone a performance which is otherwise due by the terms of the contract.9 An illustration of a contract of this sort is to be found in contracts of insurance, in which the destruction of the property through one of the risks against which the insurance has issued, or the death of the insured, is the event upon which the insurance company is, by the terms of the contract, to pay the money agreed upon.
(N.S.) 1056; Indiana Nat. L. Ins. Co. v. McGinnis, 180 Ind. 0, 45 L. R. A. (N.S.) 102, 101 N. E. 280; Citizens' L. Ins. Co. v. McClure, 138 Ky. 138, 27 L. R. A. (N.S.) 1026, 127 S. W. 740; Independent L. Ins. Co. v. Rider, 150 Ky. 505, 42 L. R. A. (N.S.) 560, 150 S. W. 649.
See Sec. 727 and 732 et seq.
The effect of such provision may be overcome by another covenant which provides for adjustment of benefits in case the age of the insured has been misstated. Mutual Life Ins. Co. v. New, 125 La. 41, 27 L. R. A. (N.S.) 431, 51 So. 61.
Such provision does not apply to a policy which was void ab initio on the ground of want of insurable interest. Bromley v. Washington L. Ins. Co., 122 Ky. 402, 5 L. R. A. (N.S.) 747, 02 S. W. 17.
5 See on this subject:
California. Remy v. Olds, 88 Cal. 537, 26 Pac. 355.
Kansas. Greenstreet v. Cheatum, 90 Kan. 290, 161 Pac. 506.
Kentucky. Collins v. Park, 93 Ky. 6, 18 S. W. 1013; Fox v. Commercial Press Co. (Ky.), 88 S. W. 1063, 28 Ky. L. Rep. 44.
Massachusetts. Magnolia Metal Co. v. Gale, 180 Mass. 124, 75 N. E. 219.
Michigan. McKinnon Mfg. Co. v. Fish Co., 102 Mich. 221, 60 N. W. 472
Minnesota. Yanish v. J. Neils Lumber Co., 101 Minn. 78, 11 L. R. A. (N.S.) 02, 111 N W. 921.
Ohio. Wright v. Hull, 83 O. S. 385, 94 N. E. 813.
Oklahoma. Leeper Bros. Lumber Co. v. Gunter, - Okla. - , 160 Pac. 606.
Utah. White v. Century Gold Min. & Mill. Co., 28 Utah, 331, 78 Pac. 868.
6 See Sec. 865.
This was the favorite illustration at Roman law. See, Czyhlarz Manual of the Institutes of Roman Law, Sec. 21.
7 Haines v. Weirick, 155 Ind. 548, 58 N. E. 712.
8 Such a provision does not render performance conditional and, therefore, does not prevent an instrument from being negotiable. See Sec. 2326.
The practical question which arises most frequently under provisions of this sort is whether the failure of the event to happen operates as a discharge, or whether performance is, thereupon, due in a reasonable time.10
Another question which may arise is whether repudiation by one party before performance is due gives an immediate right of action to the adversary party. A promise by A to marry B as soon as A's mother recovers her health, is said not to be conditional, but absolute, although performance is, by the terms of the contract, not due until such future event.11 Accordingly, if A repudiates such contract before his mother has recovered her health, B may bring action at once,12 as in the case of other absolute contracts.11