A third form of discharge of a contract, before breach, by mutual assent is where the contract has been made subject to the fulfilment of some condition precedent or subsequent, and this condition is not fulfilled. Here we are speaking of a condition pure and simple, of which the fulfilment is not warranted by either party; so that no cause of action for damages can arise from any breach thereof. Examples of a condition precedent are where it is agreed that, if a field shall be found, on measurement, to contain three acres at least, or if the drains of a house shall be tested and certified to be in good order, or if a house shall be put into good repair (k), or if a railway bill in Parliament shall pass (l), or a railway shall be made (m), the field or house or some land on the proposed line of railway shall be sold; or where an option to purchase land is given to be exercised by giving some specified notice within a limited time (n), or where A. agrees to sell part of Blackacre to B., if he (A.) can, within one year, purchase Blackacre from C. (o), or where A. agrees to sell lands to B. at a price to be fixed by a certain valuer, or two valuers or their umpire (p). In these cases there is no enforceable contract of sale until the condition has been fulfilled; and, on failure of the condition, all obligation between the parties is at an end (q). Instances of a condition subsequent are where some land is sold by an agreement which stipulates for immediate payment of a deposit and investigation of title or delivery of possession, but is to be annulled if some contemplated application to the Court be refused, or some Bill in Parliament be thrown out next session, or water be not found on boring for it; or where, by a similar agreement, fixing a future day for completion, an equity of redemption is sold subject to the mortgagee's consenting to allow the mortgage to remain for a certain term (r), or leaseholds not assignable without the lessor's consent are sold subject to such consent being obtained (s). Here a valid contract is at first formed, but is discharged on non-fulfilment of the condition. In cases like these, the vendor does not warrant the fulfilment of the condition; but he is bound, so far as the performance thereof rests with himself, honestly to use his best endeavours to procure fulfilment, and will be liable to substantial damages for a breach of this duty (s). And, in the absence of stipulation to the contrary, he has all the time until the day fixed for completion to procure fulfilment of the condition (r). It is obvious that the occurrence of the same event may form a condition precedent or subsequent according to the intention of the parties as expressed in the terms constituting the whole contract (t).

3. Discharge by non-fulfilment of a condition.

A pure condition.

Condition precedent.

Condition subsequent.

(i) 5 Vin. Abr. 522, pl. 38; Sug. V. & P. 165; Fry, Sp. Perf. Sec. 1038, p. 475, 3rd ed., p. 448, 4th ed.; above, p. 11.

(k) Counter v. Macpherson, 5 Moo. P. C. 83.

(!) Hawkes v. Eastern Counties Eg. Co., 1 De G. M. & G. 737, 5 H. L. C. 331.

(m) Gage v. Newmarket Eg. Co., 18 Q. B. 457.

(n) Above, p. 468, n. (p); Bruner v. Moon; 1904, 1 Ch. 305.

(o) See Wylson v. Dunn, 34 Ch. D. 569, 577, 578.

(p) Above, pp. 50, 51.

(q) Regent's Canal Co. v. Ware, 23 Beav. 575, 586; Scott v. LiverLastly, a contract may be discharged, before breach, by mutual assent on the exercise of an express power reserved to either party to rescind the agreement. An instance of this occurs in the power commonly inserted in contracts to sell land and enabling the vendor to unwelcome requisition.

4. Exercise of a proviso for rescission.

Power to vendor to rescind in case of an pool Corp., 3 De G. & J. 334; Modlen v. Snowball, 29 Beav. 641, affirmed 31 L. J. Ch. 44; Williams v. Brisco, 22 Ch. D. 441.

(r) Smith v. Butler, 1900, 1 Q. B. 694.

(s) Day v. Singleton, 1899, 2 Ch. 320; above, pp. 358, 360.

(t) Acherley v. Vernon, Willes, 153, 156, 157; Hotham v. East India Co., 1 T. R. 638, 645; 2 Jarm. Wills, 842, 843, 5th ed.

When a contract which has been partly performed is discharged before breach by mutual agreement, the questions, whether matters are to remain as they are, or whether the parties are entitled to be restored wholly or partly to their former position, can only be solved by reference to the terms of the agreement. It is usual to provide particularly for this, where a contract is expressly made voidable on the non-fulfilment of some condition subsequent, or where an express power to rescind the contract is given (a). Where it has been agreed, as a term of a contract intended to be immediately performed, in whole or in part, that it shall be annulled on non-fulfilment of some condition subsequent, it is thought that, in the absence of stipulation to the contrary, the parties would be impliedly entitled to restitutio in integrum (b), as in the case of rescission for innocent misrepresentation (c); for the rule is that the rescission of a voidable contract cannot take place without entire restitution (d). Thus, if a contract be made for the present sale of land, providing for immediate payment of a deposit or further sum on account of the purchase money and for entry into possession, and conditioned to become void on the refusal of some contemplated application to the Court or on failure to find water or gold there, it is thought that, on the occurrence of the avoiding event, the vendor would have to return the money paid on account of the purchase money, with interest, and the purchaser to give up possession of the land, and to account for any rents or profits received by him (e); and each would have to bear his own expenses incurred in connection with the contract, as of investigating the title. But, as we shall see, it is otherwise if the agreement be, not that the contract shall be avoided ah initio, but that its further performance shall be dispensed with. This brings us to the subject of discharge for impossibility of performance.