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.
While, in the absence of any specific agreement to the contrary, covenants for the sale and transfer of the possession of goods, on the one hand, and covenants for the payment therefor on the other, are usually held to be concurrent,1 the parties to the contract may make either of these covenants precedent to the other by the special terms of the contract.
If the purchaser has agreed to pay part or all of the purchase price in advance, payment on his part is a covenant precedent to the duty of the seller to deliver the goods which he has sold.2 A provision requiring notice to be given by the vendee before the vendor was to ship the goods sold, is precedent to the vendee's liability.3 A covenant as to the time of shipment is ordinarily regarded as precedent and material, so that the breach thereof operates as a discharge of the remaining provisions of the contract to be performed by the purchaser.4 If there is a substantial breach of the covenant as to the time at which shipment is made, such breach discharges the buyer.5 A stipulation in a contract to sell, that the goods sold were to be shipped by "sailer or sailers" within a specified time, is a condition precedent, and the vendor can not hold the vendee liable for the goods so shipped by steamer, and not within such time.6 A provision that the seller shall declare the name of the vessel on which the goods are shipped is a precedent covenant.7 A covenant by the seller to sell the goods f. o. b. cars, imposes upon the seller the duty of obtaining the cars at such place, and to load the goods thereon; and his failure so to do is a breach of a precedent covenant.8 The formation of a corporation is a condition precedent to enforcing a contract of subscription for corporate stock.9 Under a contract to deliver certain shares of stock when certain syndicates have completed the subscription to the securities of a given corporation, performance by the syndicate is a condition precedent to the delivery of such stock.10 Under a contract to give certain rebates to a vendee if he buys for a certain period of time from the vendor exclusively, such exclusive patronage is a condition precedent to the recovery of such rebates.11 If payment is to be according to the measurement of the property contracted for, such measurement is a condition precedent to payment.12 A contract to pay a certain sum for a receipt for dyeing hosiery a certain shade of black, payment to be made on a certain day if the color is right, makes the production of such color by means of such receipt, if used in good faith, a condition precedent to payment.13 Under a contract whereby A agrees to cancel certain notes and a mortgage when B surrenders certain property to A, A's refusal to cancel them when B has surrendered part but not all of such property, is not a breach.14 If the purchaser is to furnish the receptacles in which the goods are to be delivered, such covenant is precedent on his part,15 and his failure to furnish such receptacles operates as a discharge of the covenants on his part to be performed.16 No recovery can be had for such failure, however, if the party who is to make delivery is not himself ready to perform until after the party who is to furnish such receptacles has in fact furnished them.17
16 De Young v. Benepe, 55 Mont. 306, 176 Pac. 609.
17 Hinderliter v. McDonald, 84 Or. 251, 164 Pac. 378.
18 Winfield Lumber Co. v. Partridge,
- Ala. -, 80 So. 821.
19 Winfield Lumber Co. v. Partridge,
- Ala. -, 80 So. 821.
1 See Sec. 2946 and 2965.
2 England. Sanders v. Maclean, 11 Q. B. D. 327.
United States. Straus v. Russell Co.,
85 Fed. 589; Weinstein v. Studebaker Corporation, 238 Fed. 963.
California. Langley v. Rodriguez, 122 Cal. 580, 68 Am. St. Rep. 70, 55 Pac. 406.
Massachusetts. Massachusetts Biographical Society v. Russell, 229 Mass. 524, 118 N. E. 662.
Michigan. W. & A. McArthur Co. v. Bay City Old Second National Bank, 122 Mich. 223, 81 N. W. 92.
Mississippi. Stokes-Evans Co. v. Oil Co. (Miss.), 33 So. 283.
3 Maddox v. Wagner, 111 Ga. 146, 36 S. E. 609.
4 Sunshine Cloak & Suit Co. v. Ro-quette, 30 N. D. 143, L. R. A. 1916E, 932, 152 N. W. 359; Wm. B. Hughes Produce Co. v. Pulley, 47 Utah 644, L. R. A. 1916D, 728, 155 Pac. 337.
5 Sunshine Cloak & Suit Co. v. Ro-quette, 30 N. D. 143, L. R. A. 1916E, 932, 152 N. W. 359.
6 Ashmore v. Cox , 1 Q. B. 436. 7 Graves v. Legg, 9 Exch. 709.
8 Hurst v. Altamont Mfg. Co., 73 Kan. 422, 6 L. R. A. (N.S.) 928, 85 Pac. 551; Culp v. Sandoval, 22 N. M. 71, L. R. A. 1917A, 1157, 159 Pac. 956; R. J. Menz
Lumber Co. v. McNeeley, 58 Wash. 223, 28 L. R. A. (N.S.) 1007, 108 Pac. 621.
9 McCoy v. Columbian Exposition, 186 Ill. 356, 78 Am. St. Rep. 288, 7 N. E. 1043; Brooksville Ry. Co. v. Byron (Ky.), 50 S. W. 530.
10 Becker's Estate, 166 Pa. St. 313, 31 Atl. 95.
11 Dennehy v. McNulta, 86 Fed. 825, 41 L. R. A. 609, 30 C. C. A. 422.
12 Street paving. New Telephone Co. v. Foley, 28 Ind. App. 418, 63 N. E. 56.
Logs. Jesmer v. Rines, 37 Minn. 477, 35 N. W. 180.
Sale of marble. Lowry v. Barelli, 21 O. S. 324.
If the contract provides for sale on credit, delivery of the goods by the seller is precedent to his right to enforce against the purchaser his covenant to pay therefor.18 If goods are to be furnished in instalments for an entire price, and no provision is made as to the payment therefor, delivery of all the instalments but the last is precedent to the right of the seller to recover.19 If A agrees to manufacture an article for B, according to models or specifications to be furnished by B, B's covenant to furnish such model or specification is precedent to A's duty to manufacture such article.20 Under a contract by which A is to furnish seed to B, and B is to plant such seed and from it he is to grow other seed for planting which he is to deliver to A, A's failure to furnish the proper seed to 6 is a breach of a precedent covenant which excuses B for failure to deliver to A the kind and quality of seed specified in the contract.21 Under a contract for the sale of a patent right or trade secret, which provides that the vendor shall teach the vendee the means of using such right or process of selling the product, the latter covenant is precedent to the duty of the purchaser to pay, if it appears from the terms of the contract taken as a whole that payment is not due until the vendor has performed all of the covenants on his part to be performed.22
13 Hecht v. Taubel, 55 N. J. L. 410, 26 Atl. 902.
14 Ward v. Sherman, 192 U. S. 168, 48 L. ed. 391 [reversing, 7 Ariz. 277, 64 Pac. 434].
15 William B. Hughes Produce Co. v. Pulley, 47 Utah 544, L. R. A. 1916D, 728, 155 Pac. 337.
16 William B. Hughes Produce Co. v. Pulley, 47 Utah 544, L. R. A. 1916D, 728, 155 Pac. 337.
17 Lee v. Upton, - N. Car. -, 100 S. E. 268.
18 Maryland. Hazel Hill Canning Co. v. Roberts Bros., 129 Md. 306, 99 Atl. 424.
Michigan. J. W. Reedy Elevator Mfg. Co. v. Peck, 149 Mich. 657, 113 N. W. 300.
New Jersey. Kelly Construction Co. v. Hackensack Brick Co., 91 N. J. L. 585, 2 A. L. R. 685, 103 Atl. 417.
Ohio. Petersburg Fire Brick & Tile Co. v. American Clay Machinery Co., 80 O. S. 365, L. R. A. 1915B, 536, 106 N. E. 33.
Vermont. James Smith Woolen Machine Co. v. Holden, 73 Vt. 396, 51 Atl. 2.
19 In re Hellams, 223 Fed. 460; Kelly Construction Co. v. Hackensack Brick Co., 91 N. J. L. 585, 2 A. L. R. 685, 103 Atl. 417.
20 Savage Manufacturing Co. v. Armstrong, 10 Me. 147; Gardner v. Deeds, 116 Tenn. 128, 4 L. R. A. (N.S.) 740, 92 S. W. 518.