THE - CANADIAN BAR

REVIEW
VOL. XV MAY, 1937 No. -5

CONDITIONS, WARRANTIES, AND OTHER

CONTRACTUAL TERMS
The necessity for an accurate terminology in law has often
been stressed. Dean Roscoe Pound, however, has warned us
against attaching too much importance to this matter : "the
utility of precise terminology and exact meanings is more in
connection with differentiating problems from pseudo-problems
and with formulation of results than in providing solutions ."'
Put very often it is only the lack of a clear definition of what the
problem really is that has prevented the emergence of the
solution : the difficulty sometimes consists not in getting a right
answer but in getting the right question. -Moreover, solutions
which are -stated in equivocal language serve only as starting
points for further problems. - "Terminology," it is true, "matters
little . . . . -. if the variance of usage is not the cause or effect
of error,"2 but it often is. A precise terminology, though not a
terminus ad quem nor even a terminus a quo, does furnish the
rails on which the vehicle of fruitful discussion can most safely
be carried .
Some of the confusion into which we are led, by the defects
of language may be traced to two sources : firstly, the same
concept is sometimes denoted by more than one word, and secondly,
the same word sometimes applies to more than one concèpt.3
Synonyms are essential for aesthetic reasons : but it is not
always easy to know whether different words have really identical
meanings . The reader may give different_ meanings to different
words intended by the writer to have the same meaning . Sane
commodius erat singulas-causas singulis appelationibus distingui4
A more subtle error arises when the same concept is given a
Pound, The Call for a Realist Jurisprudence (1931), 44 Harv. L. Rev.
697 at p . 702.
2 DEL VEccuio, FORMAL BASES OF LAW, p. 130.
a See Pound, op. cit .
4 Gaius, 2. 146.
310 The Canadian Bar Review [No . 5

different name in different subject matters. The development

of general principles may be obstructed by the failure to realise
that though there is a difference in terminology there is identity
in substance. There are several evils flowing from the multi-
valence of words in legal currency. There is what Hohfeld
terms "the principle of linguistic contamination" : the use of a
"blanket" term to cover more than one concept conceals the
distinction between those concepts, more attention being given
to the identity of terms than to the difference of context.5 Linked
with this is the error of treating as correct a proposition involving
a word used in one meaning when the proposition has only been
established for some other meaning of that word . Least of all
such evils is the ambiguity which results where more than one
meaning of a word are relevant to the universe of discourse.
In sciences other than law use has been made of the classical
languages for the manufacture of new words having the required
precision. The remedy, in the opinion of some, has been as
bad as the ailment, for it has resulted in the creation of a
jargon not understandable of the people. The introduction of
exactness by way of Liddell and Scott is more subject to adverse
criticism in the case of law. Natural scientists may carry on
their discussions behind closed doors, but the practice of the
law must take place `publicly and in open view'. It is desirable
that the science of law should use the same language as the
practice of the law. Even with the use of ordinary language it
is possible to introduce greater precision into juristic writings.
In this article I propose to consider the nature and operation
of the different terms of a contract. The distinctions between
many terms have been quite lost as the result of applying to
all of them the one word condition . The most difficulty is
caused by applying condition to promises . It is sometimes
assumed that the terms of a contract must be either conditions
or warranties . Others recognize promises as a distinct term
of a contract but include some promises in the category of
conditions. Thus Benjamin says : "Conditions may in law be
either statements or promises to be made good or performed by
the party by whom they -are made, or collateral acts or con-
tingeyicies, there being no promise that the act or contingency
shall happen ."6 The distinction between condition and promise
s "The identity of terms seems irresistibly to suggest an identity
between the ideas which are expressed by them." HOLLAND, JURIS-
PRUDENCE, 10th ed., p. 81, quoted by HOHFELD, ]FUNDAMENTAL LEGAL
CONCEPTIONS, p. 70 .
6 BENJAMIN, SALE, 6th ed ., p . 635.
9.937] - Contractual Terms 311

is important -but there are also other distinctions which though

more subtle are not more refined than some drawn in other
branches of law.
The Nature of Promises.-"A contract," says Blackstone, "is
an agreement upon sufficient consideration to do or not to do
a particular thing." This definition, interpreting the _singular
as including the plural, is unassailable . The essence of a contract,
all are agreed, is the creation of rights between the parties :_
and a right is a claim to some act or forbearance. The con-
stituent elemejits of a contract are thus promises, a promise
being an undertaking by the promisor to act or forbear in some
specified way in the future. In contracts for executed considera-
tion there are promises by one party only, but generally there
are - promises by both parties to the contract.
Performance of a promise consists in acting or forbearing
in the specified manner : performance of a contract consists in
performance of all the constituent promises . The breach of a
contract involves the non-performance of a promise. This is
actionable at law even though no damage is sustained by the
promisee. In equity the promisee may sometimes enforce his
claim to the specified act or forbearance by specific performance
or injunction . .
Holmes does not limit promises to undertakings to act or
forbear. "A man may bind himself at law that any future event
shall happen," and moreover, "when a man covenants that it
shall rain to-morrow," he is not saying "in a short form I- will
pay if it does not rain
."' There is, he contends;- ar promise in
such a case but no undertaking to act or forbear. The essegtial
error, it is submitted, is Holmes' unwillingness to recognize the
distinction between right and right of action, between the claim
of subject against, subject, and the claim of subject against
State to enforce the-prior claim. Holmes' well-known statement
is that "a right is the hypostasis of a prophecy - the imagination
of a substance supporting the fact that the public force will be
brought to bear upon those who are said to contravene it."$
It is well not to underestimate the,importance of a sanction,
but even in early national law the maxim was not remedium est
jus but ubi remedium ibi jus. The distinction between primary
right and sanctioning right is sound. The former is a claim to
an act of forbearance; and so the elements of a promise must
be undertakings to act or forbear. A promise that it will rain
7 HOLMES, THE Common. LAw, pp . 289-290 .
8 COLLECTED LEGAL PAPERS, P, 313 .
312 The Canadian Bar Review [No . 5

to-morrow is only an elliptical way of stating a promise to

compensate if it does not rain .
The actual way in which Holmes arrived at his proposition
as to the nature of a promise is as follows. It is clear that a
man may contract to do that which he has no power to do. The
analysis of a promise offers no solution to the problem whether
the law will enforce a particular promise : that is a question
of policy . In fact in English law, as in all legal systems, a man
is bound by some promises which he cannot perform. In Canham
v. Barry s the defendant was held liable in respect of a promise
to assign a lease though he was unable to do so since his landlord
refused consent and there was a covenant against assigning
without consent . Maule J. said : "A man may no doubt for
good consideration contract to do that which he cannot be sure
that he will be able to do : a man may if he chooses covenant
that it shall rain to-morrow."1° This is Holmes' text. But it
only states that a promise, an undertaking to act or forbear,
may relate to something the promisor cannot do. His denial
"that when a man covenants that it shall rain to-morrow . . . he
only says in a short form I will pay if it does not rain" is
supported by the following statement. "This is not necessarily
so . A promise could easily be framed which would be broken
by the happening of fair weather." He does not give an example,
and it is submitted that his statement is incorrect. There is
involved, however, the consideration of the nature of a warranty,
and the question is discussed further in that connection .
Limitations and Conditions .-The promise must state the
nature of the acts undertaken to be done or forborne . This
necessitates a statement of the circumstances in which the acts
are to be done," for a particular act in one set of circumstances
is of a different nature from a similar act done in different
circumstances. All the terms of a promise define the nature of
the act to be done, but some operate by way of limitation and
others by way of condition. A limitation merely defines the
nature of the undertaking : the act must be performed in the
manner limited. If the limitation is not observed the promise
is not performed. A condition assumes that the undertaking
has been limited and sets out further circumstances in which
the promisor has the choice of either carrying out the under-
taking as limited or of not doing anything. A condition is
(1855), 15 C.B . 597.
9
At p. 619.
39
u For convenience I shall not refer to forbearances : or they may be
considered as negative acts .
1937] Contractual Terms 313 -

inserted for. the benefit of the promisor. The undertaking is

made conditional on an event happening; if it does not happen
the promisor need do nothing. - But he may waive the condition,
and his carrying out the undertaking though the event happens
is a performance of the promise. A simple illustration of the
difference between limitation and condition is this. In a promise
to accept a sound horse the quality of soundness operates by
way of limitation and the acceptance of an unsound-horse is
not a performance of the promise. In a promise to accept a
horse provided it is sound the quality of soundness operates
by way of condition. The promisor is not bound to accept an
unsound horse, but if he does so he performs his promise.
The traditional distinction between limitation and condition
is that in the former there is a reference to an event which is
bound to happen, e.g., some future day, in the latter, the event
is one which may never happen. It is true that a reference to
an event which is bound to happen cannot give the promisor
an alternative and so cannot operate by way of condition, but
the reference to an event which may never happen can, we shall
see, operate by way of limitation .
Terms Going to Performance and Terms Going to Obligation.-
The traditional treatment of limitation and condition stated also
that whereas a limitation went only to performance a condition
was necessarily suspensive of obligation . Pothier says : "The
effect of a condition is to suspend the obligation until the con-
dition is accomplished or considered as accomplished : 'till then
nothing is due : there is only in expectation-that what is under-
taken will be done : pendente conditione nondum debetur, sed
spes est debitum iri.12 , On the other hand, "The condition of
a thing which certainly will happen is not properly a condition,
and does not suspend the obligation, but only defers the right
of demanding payment of it-and is merely . equivalent to a term
of payment ." 13.
This treatment attributes to the accidental distinction of
whether an event is or is not bound to happen, the essential
distinction whether it is or is not suspensive of the obligation .
A term may be inserted in a contract for the purpose of fixing
the -inception of a promise : but such a term may refer to an
event which is -bound to happen or to one which is not bound
12 POTHIER, OBLIGATIONS (tr.
EVANS; 1806) Part II, par. 218 . The
general opinion at one time was that in Roman law condicio was necessarily
suspensive of the obligation, but later commentators do not take that view. .
See GIRARD, MANUEL ELtMENTAIRE DU DROIT ROMAIN, 8th ed ., pp . 502 ,f.
11 POTHIER, op . Cit., Part II, par. 203 .
314 The Canadian Bar Review [No. 5

to happen. Moreover if the reference be to an event which is

not bound to happen it does not follow that the term may be
waived . It may be the intention of the parties that if the event
does not happen the promisor should not be authorized to act.
He may not be interdicted from acting but if he does act it will
not be in performance of the promise. The questions (a) whether
an event is or is not bound to happen ; (b) whether a term of a
contract may or may not be waived ; (c) whether the term goes
to obligation or to performance, are independent of each other.
Where a term goes to obligation it may be considered as
not being part of the promise. In Fym v. Campbell 14 the court
took the view that a term fixing the inception of a contract
was outside the contract altogether and so not caught by the
parol evidence rule. It is, however, important to consider each
term in connection with the promise it affects ; a particular
term going to obligation may affect only one promise.
There is no specific name for terms going to obligation .
If they refer to an event which is not bound to happen then
they are included in the name condition. It becomes, therefore,
important to distinguish between conditions going to performance
and conditions going to obligations. Where the condition goes
only to performance it can always be waived . There seems to
be no valid reason why there may not be some conditions
precedent to obligation capable of waiver . Parties may provide
that an obligation shall arise either when a specified event
happens or, if it does not happen, when the promisor waives
the condition."
The exact intention of the parties must be ascertained. They
may intend there to be a power of revoking the promise
before the specified time arrives. On the other hand they may
not have such an intention. In that case the effect of the term
will be that no action for breach of contract can be brought
until after the specified time. If one party repudiates before
the specified time he cannot then commit a breach of contract
for no obligation exists. But, if he does not withdraw, his
continuing repudiation will amount to a breach when the specified
time arrives.
(1856), 6 E . & B . 370 .
14

If the event does not happen the mere choice of the promisor subjects
14
him to an obligation : nevertheless this is not an exception to the doctrine of
consideration ; for the consideration is supplied by the original agreement.
If the waiver consist in the promisor's acting as promised, such action, it
must be noted, is in discharge of an obligation and not the mere exercise of a
privilege .
1937] Contractual - Terms- 315_

The Operation of Limitations.-A limitation is of course-an .

integral part of a promise . A promise to pay £100 on Jan, 1st
is but one element of â contract though it may appear in two
separate clauses : (a) an undertaking to pay £100, (b) time .for
performance Jan . 1st . For some purposes the separation may -
be convenient, but it must not be forgotten that there is only
one promise . The time of performance does not affect the incep-'
tion of the promise : an obligation comes into existence as soon
as the contract is concluded. This is shown in English law by'
the action for an anticipatory breach of contract.
A limitation can refer to an event which may never happen:
There may be a promise to act until A - returns from Rome. 16
When A returns from Rome further action will not be a per-
formance of the promise :. the promisor cannot waive the term. ,
Again there may be a promise to act . if A returns from Rome.
Though performance cannot be required before A returns, an
obligation to act arises at once. Nor is the term a condition if
the parties have not inserted the term for the benefit of the
promisor so that he is able to waive the term. The fact that a
long period may elapse before it can be determined whether
the promisor has to act does introduce an element of uncertainty
into the contract, but it has never been suggested in the case
of a condition, which in this respect is governed by the same
considerations, that the contract would be void for uncertainty .
Should it become clear that A will never return then the promisor
is not required to act . Such inaction is, however, a performance
of the contract. Further matters relevant to such terms ar6
discussed in the next section, for the more usual operation of
a term relating to an event which may never happen is probably
by way of condition, In fact the courts would probably take
the view that prima facie such a term is a condition . 17
A promise to act only if A returns from Rome must operate
by way of limitation, It cannot be said that there is a promise
as This is sometimes wrongly considered to be a resolutive condition .
See POTHIER, op . cit., par . 224, and post p . 319 .
it Except where the
term is part of a warranty. A warranty contains a
limitation of this nature . See post pp . 327 ff. So too does the recent case of
Re A Debtor, [193711 All E .R . 1 . In that case A had guaranteed in 1933 a
debt due from B, a married woman, to C . A paid C in 1936 . A obtained
judgment from B on an indemnity; and petitioned for her bankruptcy. The
Law Reform Act 1935 only allowed petitions in bankruptcy against a
marriedwoman in respect of contracts, debts or obligations incurred after
the passing of the Act. B contended that it was no term of A's guarantee
that she should indemnify A ; but that this indemnity was imposed by law
when the guarantor was called on to pay . In argument it was admitted
that a promise to pay a sum of money on the return of A from Rome gave
rise to an immediate obligation . B's indemnity was a promise - to pay A if
A was called on to pay C .
316 The Canadian Bar Review [No . 5

to act subject to a condition that A returns from Rome. If

that were the case the condition could be waived and the
promisor act though A had not returned, whereas he has pro-
mised not to act unless A returns. Nor can it be said that the
promise is merely to forbear subject to a condition that A does
not return . If that were the case the promisor could waive
the condition and forbear even though A returned, whereas he
has promised to act if A returns. The true position is that
there are two promises ; (1) to forbear so long as A does not
return ; (2) to act if A does return . In the first there is clearly
a limitation . The second also contains only a limitation, for
waiver there would be a breach of the :first promise : it is clear,
therefore, that the parties cannot intend there to be waiver .
The Operation of Conditions.-Where the condition goes
merely to performance it is clear that it is an integral part of
a promise. A promise to pay £100 if a horse win the Derby
is one entity though it may be convenient to treat it in two
parts, and in an actual contract the promise may appear as
two clauses : (a) an undertaking to pay £100, (b) a condition,
if the horse win the Derby. It has been suggested that the
name promise should be confined to the aggregate and that
the name `prestation' should be given to the undertaking and
its limitations . This might result in an unequivocal terminology,
though prestation is capable of meaning performance. The main
objection to the new name is that there is current a terminology
whereby the undertaking apart from the condition is itself called
the promise : and this terminology does not cause error provided
it is realized that such a promise has inseparably annexed to it
the condition.
A condition defines the nature of the acts to be carried
out, but its mode of limitation is to give the promisor alternative
modes of performance. It is usual to say that the failure of
the event upon which a promise is conditional releases the
promisor from liability to perform the promise. This is only
true if promise is used as meaning the undertaking apart from
the condition. The true position is that by doing nothing the
promisor does perform his promise for he did not undertake to
do anything in the event of a failure of the condition.$
Identical conditions can be annexed to every promise of
one party or they may be annexed to every promise of both
, 1 "A promise is as truly kept and performed by doing nothing where
the condition of the stipulated act has been broken, as it would have been
by doing the act if the condition had been fulfilled." (11OLMEs, THE
COMMON LAW, p. 318.)
19371 Contractual Terms 317

parties. In the latter case the event specified in the conditions

can 'be said to be a condition of the contract . This phrase
"condition of the contract" should be confined to that case.
It is, however, sometimes used where there is meant condition
in a contract, where only one promise is subject to the condition .
It is, of course, obvious that different conditions may be annexed
to various promises; and that more than one condition may
be annexed to one or more promises or to the contract as a whole .
A condition may be framed positively or negatively. _ A
promise to act if x happens is exactly the same as a promise to
act if not-x does not happen. It is thus always possible to say
that the performance of the promise is conditional on-the happen-
ing of an event.
In order to distinguish - clearly between a condition and a
promise it would be convenient to call the happening of the
event which is the subject of the -condition, the "fulfilment" of
the condition, and to confine "performance" to the carrying out
of the promise . - The non-happening of the event would be called
the "failure" of the condition and the "breach" used for the
non-performance of a contract. This terminology would avoid
the error of considering as a promise what is really a protestative
condition making a -true promise conditional on the doing of
some act by either of the parties .
Conditions Precedent to Performance and Precedent to ®bliga-
tion.-Pothier had considerable influence on "the development of
English Law, and his view that a condition is necessarily suspen
sive of the obligation is found_ as a proposition of English law
in a modern text book. ,' It is, however, submitted that not
only does English law recognize that a condition may be pre-
cedent to performance only, but that a condition should be
regarded as going to performance unless the parties have made
it clear that they intend it to go to the existence of the obligation.
The question is one of construction and therefore dependent on
the circumstances of each case; but ordinarily parties contem-
plate that a binding obligation will arise from the time of the
conclusion of the agreement?' A repudiation by the pWmisop
1' SALMOND AND WINFIELD, CONTRACT, p . 138 .
2 ° Cf. WILLISTON, CONTRACTS, 1St ed., sec . 666 . "Generally in con-
tracts where reference is made to conditions what is meant is conditions
qualifying liability under a contract or promise, not conditions qualifying
the existence of a contract or promise . . . . The fact that no liability
on either side can arise until the happening of a condition does not however
make the validity of the contract depend on its happening. Whether there
is a contract depends on the right of the parties to revoke their promises.
A contract to sell goods to arrive will impose no liability on either party
unles* the goods arrive, but each is irrevocably bound by a contract from
318 The Canadian Bar Review [No. 5

before the event fails would be regarded as wrongful . It is

clear law that where a promise by one party is conditional on
the performance by the other of his promise a repudiation by
the former enables the latter to sue him at once without even
having to perform his promise."
The law recognizes of course that a condition may go to
obligation. Thus in Payne v. Baird'22 Bankes L.J. said : "The
sending of the sample is a condition precedent . . . . . which
has got to be performed before either party is bound to the
other." If there is failure of a condition the promisor is not
bound to carry out his undertaking. This is true whether the
condition goes to obligation or performance . But the different
operation of such conditions is seen where the promisor repudiates
before failure of the condition.
Where the condition goes merely to performance there is
at once an anticipatory breach of the contract . Subsequent
failure of the condition does not affect this fact. It may, of
course, affect the question of damages, and justify the grant of
merely nominal damages. But circumstances may be envisaged
in which damages may be substantial. A promises to charter a
ship from B provided a certain cargo arrives from Rome. Before
the cargo is shipped and B has a chance of insuring it A
repudiates . B will be entitled to substantial damages even
though the cargo is subsequently lost at sea on its way to Rome .
Where the condition is precedent to the existence of an
obligation then repudiation before failure cannot amount at the
time it is made to an anticipatory breach of the contract . Should
the condition fail no breach of the contract is ever committed .
But if the condition is fulfilled and the repudiation has not
been retracted there will be a breach of contract . If the time
for performance has not arrived when the condition is fulfilled
the breach will of course be anticipatory .
Resolutive Conditions.-A resolutive condition, or condition
subsequent, is a term of a contract which provides that on the
happening of an event the obligation under the promise shall
cease." Williston defines it as "a condition which divests a
liability once it has accrued" . It must be distinguished from
(1) a limitation providing for action until the happening of a
the outset." It is, however, submitted that a condition may go to obligation
yet the parties may not have power to revoke. The true distinction is
suggested in the text.
21 Braithwaite v. Foreign Hardwood Company, [1905] 2 K .B . 543 .
22 (1921), 9 LI .L.Rep .-167 .-
23 Cf. POTHIER, op . cit ., par . 224 .
1937] Contractual Terms 319

given event, and (2) a condition precedent to further perform-

ance on the happening of the event, which assumes a limitation
until the event . The distinction must be that in the case of a
condition subsequent the happening , of the event avoids the
liability ab initio : there is deemed never to have been any
promise. Accrued "rights" are annulled, having been subject
to the condition. The term implied by the courts under the
doctrine of frustration is thus not a resolutive condition .
Where an act has been done under the contract the happen-
ing of the event does not however give rise to a right to ,
restitutio . in integrum. I promise to give you £5 but not if A
returns from Rome. A promise to pay -arises at once. but if
I do not pay and A returns from Rome payment cannot be
demanded nor can it be alleged that there had. been a breach
by non-payment before his return . On the other hand if I have
paid and A returns I am not entitled to the return of the £5.
The condition cannot nullify an act . Of course the payment
may be made subject to a proviso for repayment if A returns .
The event in the case of a resolutive condition must be
one which may never happen. For if it is bound to happen
it is certain that the contract will become void ab initio, and
no court would consider that parties intended such an absurd
result . As it is, Roman law considered all resolutive conditions
to be invalid . Williston sees no reason why they should not
be legally- recognized 24 The event must however be limited in
some way. If the event which destroys the, promise is always
likely to happen absolute rights could never be acquired and the
promise could never be enforced . There would be no certainty
and it is submitted that the entire promise would be void. Where
the limitation depends on the doing of an act by some person
there is of course a limitation on the period., of uncertainty,
namely the death of the person. If A dies before having returned
from Rome it becomes impossible for him to return and the
promise becomes absolute. A promise to pay £5 but not if
St. Paul's should be demolished is however void. . No action
can ever be brought on . the promise for the promisee has no
absolute right . There must be some limitation such as "but not
if _St . Paul's should be demolished within 2 years" .

24 Head v . Tattersall (1871), L .R . 7 Ex . 7, is perhaps

an example of one in
English Law . The purchaser agreed to buy a horse provided he could
return it by the veening of a certain day. The court regarded the proviso
as a condition subsequent to the vesting of the property in the buyer . They
might also have regarded the promise to pay as subject to a similar condition
subsequent .
320 The Canadian Bar Review [No. 5

It may not be clear from the wording of a condition whether

it is precedent or subsequent to obligation. A term that A shall
not return from Rome may be a condition precedent - I promise
to give you £5 if A shall not return from Rome : or it may
be a resolutive condition - I promise to give you £5 but not
if A returns from Rome . In either case of course if A does
return from Rome there is no obligation to pay the £5 but
there are important differences, as already seen, between the
two promises . It is submitted that only the clearest language
would justify a court in treating a condition as resolutive. "Such
conditions are rare," says Williston. Prima facie the condition
should not be regarded as resolutive.
Further differences between a condition precedent to obli-
gation and a resolutive condition exist where there is repudiation.
(a) I will give you £5 on January 1st 1938 if A does not return
from Rome before September 1st 1937 . If the condition is
precedent to obligation and I repudiate on June 1st 1937 there
is no anticipatory breach on that date. If A returns from Rome
by September 1st then no obligation ever arises and there is
never any breach . If A does not return there is an anticipatory
breach on September 1st provided the repudiation has not be~ft
withdrawn . (b) I will give you £5 on January 1st 1938 but
not if A returns from Rome before September 1st 1937. If the
condition be resolutive and I repudiate on June 1st 1937 there
is an anticipatory breach . But your right is conditional, and
you cannot bring any action, you must wait to see whether the
obligation is not destroyed ab initio by the return of A. If A
returns from Rome by September 1st then your right of action
ceases to exist. If A does not return there is an anticipatory
breach committed on June 1st.
Conditions de Praesenti.-The event which is the subject of
the condition need not be future . It may be uncertain as far
as the parties are concerned though past or present and they may
provide for the contingencies of which they are not certain.
A charter of a ship may be conditional on its having arrived
at a port on some past date, or on its being at the port at the
time of the contract. Such a condition is termed de praesenti.
In Roman law such a term was not considered an obligation .
Buckland says : "A gift to X if St. Paul's is 400 feet high was
not conditional ; it was valid or not according to the facts." 2 s
Pothier accepted the Roman law doctrine. "An obligation con-
tracted under the condition of anything that is past or present
26 TEXT BOOK OF ROMAN Lnw, 2nd ed ., p. 297.
1937] Contractual Terms 321

is not The
properly a conditional obligation ." 26 common law
attitude, however, it is submitted, is as stated by Williston 27
A condition de praesenti operates in the same way ~ as one de
futuro : it is fulfilled or fails when the true state of facts is
discovered or ought to have been discovered by the party to
whose promise the condition is annexed .
A condition de praesenti may go either to performance or
to obligation, and in the latter case it may be precedent or
subsequent. It is more likely that parties will consider a con
dition de praesenti as going to obligation than one de futuro .
They may intend an obligation to arise only in certain circum-
stances . On. the other hand they may not intend that the
promisor should consider himself free before the actual facts
are ascertained : which is the position if the condition goes to
obligation . On the whole, however, it is likely that the proposi-
tion that a condition is prima facie.to be considered as precedent .
only to performance does not apply to the case_ of a condition
de praesenti. .
If failure of a condition de praesenti always made the promise
entirely void there could never be waiver of such a term. Waiver
however is regarded as possible in some cases. There may
however be other cases where the parties do not intend there to
be waiver. In such cases failure of the event would of course
make the contract void ab in tio28
The differences between a condition de praesenti being
(1) precedent to performance ; (2) precedent to obligation ;
(3)- resolutive, can be illustrated by considering the effect of
repudiation before discovery of the true facts. (1) There is a
breach at once for which nominal damages at, least may be
recovered even if the condition fail. (2) If the condition fail
there is no breach. If the condition is fulfilled the breach arises
at the time of the discovery of the facts. This latter proposition
appears unjust, and is an objection to the view put-forward
above of the materiality of the time of discovery by the parties .
(3) There is a breach at the time of the repudiation according
as the condition is fulfilled or no. This appears to accord with
the ordinary intention of the parties : and so the courts may find
no difficulty in regarding a condition de praesenti as being re-
solutive.
. 26 POTHIER, op. cit., par. 198 .
27 Op . cit ., sec. 663 .
28 One case in which there is no waiver arises when the reference to the
past or present - event is a limitation . The legal position in such a case,
apart from the question of waiver, is the same as that in the case of a
condition precedent to performance.
322 The Canadian Bar Review [No . 5

A common example of a condition de praesenti is one relating

to the existence of some quality in the subject matter of the
transaction . The existence of an implied condition de praesenti
appears to me to be the best explanation of the effect of mutual
mistake on a contract. Where parties are under a mutual
mistake as to the subject matter of a contract, erroneously
supposing that it possesses some particular quality, then if the
non-existence of that quality makes the subject matter different
in identity from that which the parties believe it to be, a condition
is implied ." Section 6 of the Sale of Goods Act 1893 deals with
the special case of an assumption that there is in existence the
subject matter of a contract for the sale of specific goods . The
section enacts that "if the goods are not in existence the contract
is void" .ao The section thus prevents repudiation before the
discovery of the facts from amounting to a breach . The effect
of the section is the same as if a resolutive condition were deemed
to exist. There is of course no possibility of waiver of the
promises to deliver and accept the goods .
Potestative Conditions .-These involve the doing of an act.
by some person. There are three classes to be considered .
A. Where the act is to be done by somebody other than the
promisor or promisee.
I promise to give you £5 if A goes to Rome before January
1st next. This does not differ from a condition independent of
the doing of an act by some person : and is indeed a common
example of a condition .
B. Where the act is to be done by the promisee.
The act may or may not also be the subject of a promise by
the promisee. The two cases must be distinguished . (i) I
29 In Bell v. Lever, [1932) A .C . at p . 218, Lord Atkin rejects the theory
of implied condition as explaining the effect of mutual mistake . He agrees,
however, that it supplies the same practical test as his theory . His theory
is that mutual mistake is not concerned with "the investigation of the terms
of a contract when made" but with the "formation of a contract" . It
"operates so as to negative or in some cases nullify consent." The distinc-
tion between "negativing" and "nullifying" consent in this particular
context is not seen by me . My objection to his theory is that it is not based
on any principle . Why should mutual mistake nullify consent, and if so
why only where the mistake affects the identity of the subject matter?
Historically the doctrine of mutual mistake is an illogical deduction from the
erroneous theory of consensus ad idem in the sense of subjective agreement .
If the effect of mistake is that one party assumes one thing and the other
party another then according to the subjective agreement doctrine there
can be no contract . But if both parties make the same assumption, as in
the cases of mutual mistake, there is no reason according to the subjective
agreement doctrine why there should not be a contract . The fallacy consists
in assuming that a proposition true for some kinds of mistake is true for all.
kinds of mistake .
30 Lord Atkin considers this a case where consent is nullified .
19371 Contractual Terms 32 3

promise you £5 if you go to Rome before January 1st, but you

do not promise to go to Rome . If you do not go to Rome I am
released from my promise to pay you £5, but you are under no
liability to me for not going. (ii) I promise you £5 if you go to
Rome : you promise to go to Rome. There are two terms of the
contract the subject matter of which is going to Rome : there is a
condition annexed by my promise and there is your promise.
Each has a distinct function and so your going to Rome has a
dual operation. It is a fulfilment of the condition annexed to
my promise and also it is performance of your promise . I must
pay you the £5 not because you have performed your promise
as such, but because such performance operates as a fulfilment
of the condition annexed to my promise. Likewise, of course,
your not going to Rome has .a dual operation. There is a failure
of the condition annexed to my promise and you have committed
a breach of your promise . Because of the failure of the condition
I do not have to pay you £5 : because of the non-performance of
your promise you are liable to me in damages. The event which
brings about failure of the- condition operates also as a breach
of your promise. Failure of the condition is followed by your
liability to pay damages but,is not the cause of it. The breach
of your promise is followed by release from my promise but is not
the cause of it. This does not appear to be always clearly=
recognized in the treatment of dependent covenants of which the
instant case is an example. When it is said that my promise
to give you £5 is dependent on your promise to go to Rome there is
meant that . annexed to my promise is also a condition that you go
to Rome. Theexact position is obscuredby aterminologywhich calls
your promise a condition and says that breach of the condition
releases me from liability. It is difficult to saywhether the termino-
logy or the analysis is at fault, and if both which ismore to blame.
C. Where the-act is to .be done by the promisor.
Again the case where the act is also the subject of a promise
must be distinguished from_the case where it is not. (i) I promise
to give you £5 if I go to Rome by January 1st but I do not
promise to go to Rome. Performance appears to be dependent
on my caprice as to whether - I go to Rome or not. The case,
however, is not the same as the stipulation spondesne si volueris
which in Roman law was a nullity_." I remain free to go to
31 Dig. 54 .1 .46.3 . Cf. Re Brand Estates Ltd .,-[19361 3 All E .R . 374 . A
clause in a contract provided that "publishers shall be freed from the obliga-
tion of publishing the guide, should, in their opinion insufficient advertise-,
ments be obtained to justify publication" . It was argued that no real
obligation rested on the publishers, but the court held that the opinion had
to be a reasonable and honest one .
324 The Canadian Bar Review [No. 5

Rome or not, but if I do go I must give you the £5. There is a

binding promise in that event and not a mere option . (ii) I
promise to give you £5 if I go to Rome and I also promise to go
to Rome. If I do not go to Rome I break my promise to do so,
but I am released from my promise to give you £5. In assessing
damages for breach of the promise to go to Rome the fact that I
promised to give you £5 if I went must not be taken into account
or proper effect will not be given to the condition .
Dependent Covenants.-Covenants are said to be dependent
when, if one party commits a breach of his covenant, the other
is entitled to repudiate his covenant and ceases to be bound
thereby. The leading case in English law used to be Boone v.
Eyre,32 in which Lord Mansfield stated that the test of depend-
ency is whether a covenant goes to the whole of the consideration
or only to part. The older learning on the subject is to be
found in the notes of Serjeant Williams to Pordage v. Cole ."
His comment on Boone v. Eyre is that "where a person has
received a part of the consideration for which he entered into
the agreement it would be unjust because he has not had the
whole he should therefore be permitted to enjoy that part with-
out either paying or doing anything for it. Therefore the law
obliges him to his remedy to recover any damage he may have
sustained in not having received the whole consideration."
This is a construction of the term ex post facto and is unsound.3;
Perhaps appreciation of this resulted in the test of dependency
adopted later being whether the covenant goes to the root of
the consideration . This test appears to be arbitrary and unsup-
ported by principle. Moreover it has proved unsatisfactory as
a practical guide. As Lord Sumner said : "the phrase `goes to
the root of the consideration' like most metaphors is not nearly
so clear as it seems."" The courts have eventually, after much
labour, arrived at this test as to whether covenant A is depend-
ent on covenant B. Would performance of covenant A, though
there was no performance of covenant B, be different in identity
from that for which the parties clearly intended to stipulate?36
Much of the difficulty with which the courts have had to
contend is the terminology found as early as Boone v. Eyre
whereby if one covenant is dependent on another the latter is
32(1777), 1 H .B1 . 273 n .
331 Wm. Saunders 320 .
a4 See the adverse comments in Ellen v. Topp (1851), 6 Ex . 424 . And
see Wallis v. Pratt, [1911] A .C . 394 at p . 400 .
3s Bank Line v. Capel, [1919] A .C . 459 .
36 Guy-Pell v . Foster, [1930] 2 Ch . 169, per Lawrence L.J. at p . 187 :

Huntoon v . Kolynos, [1930] 1 Ch. 528 .

1937] Contractual Terms - 325

called a, condition." The problem is really a simple one. When

is the performance of one promise a condition of another promise?
For a promise is dependent on another promise if there is annexed
to the former promise a condition that the latter promise be
performed. The terminology which calls the latter promise a
condition prevents the problem being stated thus, for it would
appear nonsensical to say a promise is a condition if its perform=
ance is a condition.
The solution of the problem is also simple . The contract
may expressly provide that performance of one promise is to
be a condition of the other. You promise to go to Rome. I
promise to give you £5 if you go to Rome . We have already
considered such a case . If there is no express condition the
problem depends on whether a condition can be implied. The
rules as to the implication of terms in a contract are now quite
clear. A term is implied in a contract if it is necessary in a
business sense to give efficacy to the contract, if failure to add
such a term would make the contract different in identity from
that contemplated by the parties.3$ Thus a - promise will be
subject to an implied condition that a promise of the other
party be performed if without such- a condition the promise
would be different in identity from that for which the parties
clearly intended to stipulate. This is the test at which the
courts have finally arrived by another route. A similar test
will decide, whether a reference to any matter is a condition of
a promise or whether it operates by way of warranty.
Mutually Dependent Covenants .-Two promises cannot 'be
mutually dependent in the sense that performance of one is â
condition of performance of the other and vice versa : that
would result in a stalemate. Promises are said to be mutually
dependent when the promise of each party- is subject to the
condition that the other is ready and willing to perform his
promise. I3olmes distinguishes clearly between the promise and
the condition," but unfortunately sec. 28 of the Sale of Goods
Act calls the promises concurrent conditions .
37 Williston strongly criticizes this terminology. He does not state,
however, its early sanction by judicial use and its present statutory authority
in the Sale of Goods Act . His criticism is found in sec. 665 of his great
work. "The difference between conditions and promises is so radical in
its consequences that there is no excuse for a nomenclature which fails to
recognize the distinction . In the English books there has sprung up an
astonishing usage of the word `condition' in the law of sales as meaning a
certain kind of promise; and their usage has to some extent been followed
in the United States . It cannot be too strongly deprecated ."
38 See The Moorcock (,1889), 14 P .D . 64 ; Reigate v. Union Manufacturing
Co., [191811 K .B . 592 ; Metropolitan Water Board v. Dick, Kerr 8e Co ., [19181
A.C . 119 ; Bank Line v. Capel, [1919] 435 ; Bell v. Lever, [1932] A .C . 161 .
39 HOLMES, op . cit., p . 321 . -
326 The Canadian Bar Review tNo . 5

Waiver of Conditions .-Waiver is a unilateral act of the

promisor whereby he manifests an unequivocal intention of
performing the promise even though the condition fails. Conduct
is sufficient, and actual performance of the promise despite
failure of the condition is of course an obvious case of waiver.
Where A's promise is conditional on B doing some act then if
A prevents B from doing that act he is deemed to have waived
the condition : he shows he does not require the act to be done .
Is waiver revocable? It appears not unreasonable to hold
that it is revocable except where the other party has altered
his position in reliance on a declaration of waiver . If the
parties agree for valuable consideration that one party shall
waive a condition the agreement would itself constitute an
irrevocable act of waiver . If both parties agree to waive
conditions annexed to their respective promises they would
thus irrevocably waive the conditions . Consideration is not
necessary for waiver, but even if waiver is otherwise revocable
it is submitted that it becomes irrevocable if there is consider-
ation. It is not a case of there being merely a collateral
contract not to revoke, under which, though revocation is
possible, it amounts to a breach of such contract.
The courts might hold that waiver is always irrevocable.
The promisor has the alternative under the contract, if the
condition fail, of not acting or electing to act. It is from the
nature of the case impossible for him to elect without full
knowledge of the alternatives . He is given the alternative for
his own benefit. Should he not be bound by his election? Where
he has actually performed despite failure of the condition he
is of course on any theory unable to recall his waiver.
It will be remembered that waiver is not possible with
regard to all conditions going to obligation. The name condition
has been given to terms going to obligation referring to an
event which may never happen even though the parties do not
intend there to be waiver .
The condition which is waived may be the performance by
the other party of his promise. Waiver of the condition does
not release the other party from his promise: he will be liable
in damages if he does not perform his promise?° There would
have to be consideration for the release of the promise, but it
is not necessary for waiver of a condition. Consideration might
be supplied for waiver of the condition, and yet the agreement
40 It is just possible that sec . 11 (1) (a) of the
Sale of Goods Act is merely
a statutory declaration of this proposition .
1937] _ ' Contractual Terms 3-27

might not extend to release of the promise, though in most cases

it would. Of course there might be a release of the promise
without waiver of the condition.
An agreement by parties to a contract to waive the conditions
annexed to their promises is different from an agreement which
rescinds a contract and substitutes therefor a new contract .
In the case of waiver the old contract continues. The distinction
is important in the case of a contract requiring written evidence
e.g., a contract for the sale of goods of more than £10. Where
there is rescission there must be a memorandum of the substituted
contract in order that it may be enforced, though effect can be
given to the rescission alone without any memorandum . On
the other hand the agreement to waive is not a contract for the
sale of goods, and the contract can be enforced in its absolute
form though there is no memorandum of the waiver.
In the light of this difference the distinction between the
doctrine that a promise subject to a non-fulfilled condition de
praesenti is void ab initio and the doctrine that the failure of the.
condition operates in the same way as the failure of a condition
de futuro is seen to have practical consequence. Let us consider
a contract for the sale of goods of more than £10 in value subject
to the condition that St. Paul's is more that 400 feet high . (a) if
a condition de praesenti operates in the same way as one de futuro
this condition can be waived. A binding contract will then
exist without a new contract being entered into and without
any new memorandum being required . If' therefore there were
an agreement to waive and the seller did not deliver he could be
sued for breach of the contract : he could not be sued for breach
of an agreement to waive for waiver has in fact taken place.
(b) If the contract is to be deemed void there could be no waiver.
The parties could however agree to perform despite the failure
of the condition. - But this would be a new contract for the
sale of goods and would require a new memorandum . It would
not be. waiver 41
Warranties.-A warranty is a promise to compensate the .
promisee in money for the harm he suffers by the happening of a
specified event. Its essence is insurance against the risk of the
event happening. But for the warranty the promisee may have
had himself to bear the risk: the warranty makes it clear that
the risk is borne by the promisor42 In contracts of guarantee
411n Bell v. Lever, [1932] A.C . at p . 225, Lord Atkin refers to the
possibility of a contract subject to a non-fulfilled condition de praesenti
being waived . Yet he also says the contract is void ab initio .
42 Cf. SALMONS ôa WINFIELD, CONTRACT, p . 32 .
328 The Canadian Bar Review [No . 5

and assurance such a promise is the principal term : and the

promise is not called a warranty. A warranty is generally a
collateral term of a contract. By this it is not meant that the
warranty is in any way a subsidiary or less important term of
the contract but merely this: the risk assumed is one connected
with the subject matter of another promise made by the
warrantor, as where A sells a horse and warrants that it is sound.
According to this definition performance of the warranty is
payment of the compensation, which is nil if the risk does not
materialize : breach of the warranty is failure to compensate.
It would be reasonable to hold that there was no breach until
the warrantor had knowledge, or means of knowledge of the risk,
and had failed thereafter to pay compensation . It would also
follow that in some cases the promisee would have to give notice
to the warrantor of the materialization of the risk, e.g., where
this could only be known by the promisee .43
The ordinary meaning, however, of the phrase "breach of
warranty" is not failure to make compensation, but material-
ization of the risk-the happening of the event insured against .
If I warrant that a horse is sound the mere fact that it is unsound
is said to be a breach of warranty, and any question of my know-
ledge of its unsoundness or of my unwillingness to compensate
may be deemed irrelevant. It is submitted that this is due to
the tortious character of an action for "breach of warranty" .
If I warranted that a horse was sound when it was not then the
law certainly was at one time that I had committed a breach of
a duty imposed by law .44 The mere fact that the horse was
unsound was thus a "breach of warranty" . If the warranty
related to a fixture event independent of an act of the warrantor
no cause of action lay in tort if the risk materialized . If I sold
you a horse and warranted that it would live for one year and it
died within the year your cause of action lay in contract only.
In such a case it is submitted that no action lies unless I am
unwilling to compensate, which may involve my knowledge of
the death of the horse. It cannot be said that the death of the
horse gives rise per se to an action for breach of warranty. It is
possible that the courts might now hold that all actions for
breach of warranty are contractual. If the warranty relates to
a present state of facts then insofar as an action lies without

43 "There are certain cases where from the very nature of the transaction
the law requires notice to be given though not expressly stipulated for."-
Vyse v . Wakefield, 6 M . & W . 442, per Parke B.
44 Williamson v. Allison, 2 East 446 .
19371 Contractual Terms 329 -

proof of unwillingness of the warrantor to compensate the cause

of action is still in tort.
Holmes apparently would draw no distinction between the
nature of a warranty and the nature of other promises: All
promises involve the "assumption of the risk of a future event"
and "there is no second subsidiary promise to assume that risk",
_"the assumption follows as a consequence directly enforced by -
the law without the promisor's co-operation" 45 This is certainly
true of promises other than warranties : but Holmes would apply
it also to warranties. As we have seen, in his view a promise
that it will rain to-morrow is not a promise to compensate if it
sloes not rain. Nevertheless it is submitted that in the case of a
warranty, while there is only one promise, that promise is the -
specific assumption of the risk . The payment of compensation
is not a "consequence enforced by the law" but the essence of
the promise. It is true that according to this analysis the
obligation imposed by law appears to be the same as that imposed
by the parties . This is not however due to an error in the
analysis whereby what is only a legal consequence of a breach of
warranty is made part of the definition of a warranty. - The
legal remedy for every promise to pay money appears to be the
same as the contractual obligation : the common law action for
damages appears to operate as a decree for specific performance46
Holmes supports his argument by saying that "a. promise
could easily be framed which would be broken by the happening
of fair weather" . He does not frame one, and I find it difficult
to envisage a promise that it will rain to-morrow which is broken .
by the happening of fair weather . If I promise to pay you a sum
of money at the very moment when fair weather occurs to-
morrow this may be broken by the happening of fair weather, 47
but this is not a promise that it will rain. This is a promise
essentially for payment of money, the reference to fair weather
(the non-existence of rain) being merely a limitation. The
essence of a promise that it will rain is a promise to compensate

4' HOLMEs, THE COMMON LAW, p. 302.

46 Cf. FRY, SPECIFIC PERFORMANCE, sec . 16, (iii) : "Lord Mansfield C .J .
has remarked that `pecuniary damages upon a contract for payment of
money are from the nature of the thing a specific performance' (Johnson v.
Bland 2 Burr, at 1086) . But the remark seems hardly strictly accurate .
No doubt the sum agreed to be paid will be the same whether the contract
be performed or broken . But in the former case the money is paid in
performance of the contract : in the latter it is paid as a satisfaction for its
non-performance ."
47 A promise
to pay you a sum of money one hour before fair weather
occurs must be broken by the happening of fair weather . This, however,
is certainly not a promise that it will rain .
330 The Canadian Bar Review [No . 5

if it does not. In such a case a contractual breach is constituted

not by fair weather but by unwillingness to compensate.
The reference to the happening of the event in a warranty
operates by way of limitation . An obligation arises at once,
not merely when the event happens. The damage sustained by
the promisee is determined when the event happens, and the
amount of compensation is then fixed. If the event happens
but no damage results then it is submitted there is no payment
to be made at all. No action lies for nominal damages: a
warranty is insurance against risk of damage. If the event
does not happen no payment can be made under the warranty :
any payment would be outside the scope of the warranty . The
reference to the event being a limitation is not a condition which
can be waived . Moreover unless the event happens the amount
of compensation cannot be ascertained.
The materialization of the risk does not release the
warrantee from his obligation under the contract . I warrant
that a horse I sell you is sound. You must pay the price even
should it be unsound, though you may set off damages for breach
of warranty. A promise may, however, be subject to a condition
the subject matter of which is the risk contemplated by a
warranty : e.g., I warrant that a horse I sell is sound : you promise
to take delivery and pay the price provided the horse is sound.
Each contract must be examined to see whether an event
referred to is the subject matter of a condition .as well as a war-
ranty : there may be a warranty without there being a condition.
A warranty, like any promise, may itself be subject to a
condition, e.g., I warrant that a horse I sell you will live for a
year provided it is not used for hunting. The condition may
be that you shall waive a condition annexed to your promise .
Thus, I warrant the horse I sell you is sound provided you take
delivery and pay the price; you promise to take delivery and
pay the price provided the horse is sound. If the horse is
unsound you may avail yourself of the condition annexed to your
promise: but in that case you cannot sue me on my warranty-
I can avail myself of the condition annexed to it. You can
waive the condition and take delivery, and in that case my
warranty becomes absolute and I must compensate you?$

J. L. MONTROSE .
Queen's University, Faculty of Law,
Belfast, N. Ireland.
1, This, it is submitted, is the real effect of sec. 11 (1) (a) of the Sale of

Goods Act .