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.
If compensation for a partial failure of consideration will not give full protection to the interests of the party who is not in default, and if the part of the consideration which has failed is a vital element of the contract, such failure of consideration operates as a discharge of the entire contract including the remaining subsidiary provisions.1 A contract to sell or to lease realty is discharged by the failure of the vendor to perform a covenant which is a vital part of such contract, although it is but one out of a number of different covenants.2 A contract by which A agrees to convey certain realty to X, and X agrees to resell such realty and to divide the profits with A, is discharged if B, who is a co-owner with A, does not join in such conveyance "to X.3 If A agrees to construct a building on certain realty and to convey it to B, A's declaration that he will be unable to construct such building is a renunciation of a vital provision of such contract.4 A contract by A to convey his franchise for a street railway and his interests in such railway, is broken as to a vital element if A's franchise is of no legal effect.5 If A agrees to lease a room to B and also agrees that no other room in such building shall be used for the sale of certain articles which B intends to sell in such room, A's breach of such covenant in leasing a room to X for the sale of such articles is a breach of a vital term in the contract between A and B.6 If A has conveyed realty to B under a contract by one term of which A is to build a railway near such realty within a certain time,7 or A is to secure a right of way by which B can have access to his realty,8 or by which A is to grade and construct an asphalt street with sewer and gas, and also to lay a sidewalk,9 or by which A is to maintain an orchard upon such realty so as to convey to B an orchard which bears fruit,10 A's breach of any one of such covenants is regarded as a breach of a vital term which discharges the contract. If A and B enter into a contract by which A surrenders to B the possession of A's mine, and B is to operate such mine and deposit the proceeds thereof in a given bank in A's name, such latter covenant is vital; and B's act in depositing such proceeds in another bank in his own name is a breach for which A may avoid the contract and take possession of such mine.11 Under a contract by which B was to sell A's realty, as A's agent, and A was to deposit the purchaser's notes with X in order to secure B's commission, and B was to give bond to protect A against the claim of C for part of such commission, A's covenant to deposit such notes was a vital term of the contract and on breach thereof B might recover without showing that he had given such bond.12 Under a contract by which B conveys realty to A, and A agrees to furnish money to pay off the liens thereon, to sell such realty, and to divide the proceeds with B after repaying to A the advances thus made by him, the covenant to resell is a vital term of the contract; and if A delays an unreasonable time and refuses a number of opportunities to sell, B may have a reconveyance upon tendering the advances made by A.13 If A and B enter into a contract by which A leases certain realty to B, and B agrees to construct a building thereon and to pay rent therefor, and A agrees to buy such building at the termination of the lease, B's covenant to pay rent is a vital term of the contract; and if B does not pay rent and A enters by virtue of a re-entry clause, he is not obliged to pay for such building.14 If the covenant to operate a mine or to drill wells for oil and gas is a vital feature of a mining lease, or of a lease for oil and gas, failure to perform such covenant will be regarded as a discharge of the entire contract.15
2 MulIreed v. Thumb, 119 Mich. 578, 78 N. \V. 658.
3 National Bank v. Sherman, 23 S. D. 8, 119 N. W. 1010; National Bank v. Mailloux, 27 S. D. 543, 132 N. W. 168; Coleman v. Valentin, 39 S. D. 323, 164 N. W. 67.
1 Withers v. Green, 50 U. S. (9 How.) 213, 13 L. ed. 109.
2 Withers v. Green, 50 U. S. (9 How.) 213, 13 L. ed. 109.
3 Thornton v. Wynn, 25 U. S. (12 Wheat.) 183, 6 L. ed. 595; Daniels v. Englehart, 18 Ida. 548, 39 L. R. A. (N. S.) 938. Ill Pac. 3.
1 England. General Billposting Co. v. Atkinson , A. C. 118 [affirming (1908), 1 Ch. 537]; Measures Bros, v. Measures , 2 Ch. 248 [affirming (1910), 1 Ch. 336].
United States. Columbus v. Mercantile Trust & Deposit Co., 218 U. S. 645, 54 L. ed. 1193; Kauffman v. Rae-der, 108 Fed. 171, 54 L. R. A. 247, 47 C. C. A. 278
Alabama. Parker v. Bond, 121 Ala. 529, 25 So. 898.
California. Campbell v. Kennedy, 177 CaL 430, 170 Pac. 1107; Walker v. Harbor Business Blocks Co.. - Cal. -, 186 Pac. 356.
Florida. Alachua Phosphate Co. v. Anglo-Continental Guano Works, 51 Fla. 143, 40 So. 71; Southern Colonization Co. v. Derfler, 73 Fla. 924, L. R A. 1917F, 744, 75 So. 790.
Georgia. Timmerman v. Stanley, 123 Ga. 850, 1 L. R. A. (N.S.) 379, 51 S. E. 760.
Illinois. University Club v. Deakin,
265 111. 257, L. R. A. 1915C, 854, 106 N. E. 790.
Iowa. Temple v. Pennell, 123 la. 729, 99 N. W. 567.
Kentucky. Monarch v. Owensboro City R. Co. (Ky.), 85 S. W. 193, 27 Ky. L. Rep. 380; Seventh St. Planing Mill Co. v. Schaefer (Ky.), 99 S. W. 341.
Louisiana. New Orleans Polo Club v. Jockey Club, 128 La. 1044, 55 So. 668; Queensborough Land Co. v. Caz-eaux, 136 La. 724, L. R, A. 1916B, 1201, 67 So. 641.
Massachusetts. Dudley v. Wye, 230 Mass. 350, 119 N. E. 790.
Michigan. J. W. Reedy Elevator Mfg. Co. v. Peck, 149 Mich. 657, 113 N. W. 306.
Minnesota. Wasser v. Western Land Securities Co., 97 Minn. 460, 107 N. W. 160.
Ohio; Coffinberry v. Sun Oil Co., 68
O. S. 488, 67 N. E. 1069. Oklahoma. Brown v. Wilson, 58
Okla. 392, L. R. A. 1917B, 1184, 160 Pac. 94. Rhode Island. Ferris v. Pett, - R.
1. -, 2 A. L. R. 768, 105 Atl. 369. Washington. Hodges v. Price, 38