Brief Fact Summary. Kingston (Plaintiff) brought an action for breach of contract against Preston (Defendant) for failing to comply with covenants to the contract.
Synopsis of Rule of Law. The presentation of a good security by one party is a condition precedent to the other party’s obligation to perform.
Issue. Whether the covenant that the Defendant had an obligation to convey the business and the covenant that the Plaintiff had an obligation to post a security bond were independent?
There are three types of covenants: (1) those that are mutual and independent where either party may recover damages from the other for the injury he received as a result of the party’s breach and it is no excuse for the Defendant to alleged breach of a covenant on behalf of Plaintiff; (2) covenants which are conditions and dependent in which performance of one depends on the performance of another, till the prior condition is performed the other party is not liable to an action on his covenant; and (3) those that are mutual conditions to be performed at the same time and if one party readily performs an the other refused to perform and the party who was ready to perform may maintain an action for the default of the other.
The promises were not independent and the giving of a security by the Plaintiff was a condition to the Defendant’s duty to convey the business. Presenting good consideration is condition precedent to Defendant’s obligation to convey the business. It would be a great injustice to compel the Defendant to turn over his business to the Plaintiff without the security for which he bargained for and to have the only remedy an action for breach.
Discussion. This case is an example of the use of constructive conditions in bilateral contracts. Constructive conditions are supplied by the court rather than agreed upon by the parties.