Brief Fact Summary. Edwin J. Schoettle Co. (Plaintiff) submitted action to a judge for arbitration disputing the claim presented by Lester Kardon (Defendant) against the escrow fund for $69,998.42 as a liability of the seller under the agreement. Defendant appeals the dismissal of his motion to correct the arbitrator’s award.
Synopsis of Rule of Law. Resolution of whether a provision is a condition or a warranty depends on the interpretation of the language in the agreement.
It is not intended by this exclusion, however, to prevent the application of a particular section of this Article by analogy to securities when the reason of that section makes such application sensible and the situation involved is not covered by the Article of this Act dealing specifically with said securities (Art. 8.View Full Point of Law
Issue. Whether the provision constitutes as a warranty or a condition?
Held. The provision was a condition and not a warranty. Arbitration award affirmed.
The agreement was carefully and meticulously prepared by counsel after they went through careful negotiations. To be included among the conditions was the financial condition of the company and that the fulfillment of the conditions was to take place not subsequent but prior to or at the closing and the buyers obligations were made subject to the fulfillment of the condition.
To construe the provisions as creative of a promise for the breach of which the buyer could recover damages would be inconsistent with the other provisions of the agreement. The buyer was under no obligation to complete the purchase. In order to determine if the provision is a condition or a warranty depends on the interpretation of the language of the agreement. Here is it sclera that the parties intended it to be a condition and not a warranty and once the Defendant elected to accept this agreement the provisions ceased to be operative and the Defendant had no right to recover any damages.
Discussion. A condition is a stipulation or a prerequisite in a contract, in other words a future and uncertain event on which the existence of an obligation depends. A warranty is an express or implied undertaking that something in furtherance of the contract is guaranteed by one of the contracting parties.