Brief Fact Summary.
The Plaintiffs (Subcontractors) contracted with the Defendant (Contractor) to do work with “Payments to be made as received by the Owner.” Although the Defendant was not paid, the Plaintiffs received a judgment against the Defendant for the agreed price.
Synopsis of Rule of Law.
When an express promise to pay is conditioned upon the happening of an event and the event does not take place, payment is not due.
It is well settled that conditions in contracts for compensation of brokers have been enforced in accordance with the letter of the promise to pay.View Full Point of Law
The Plaintiffs (Subcontractors) contracted with the Defendant (Contractor) to build concrete walls at fifty-five cents per cubic foot as “specified in a certain contract between the Contractor and Village Apartments,” with Payments to be made as received by the Owner.”
The Defendant did not pay the Plaintiffs because he was never paid, and the trial court rendered a judgment in his favor. However, the Appellate Division reversed on the ground that the contract was ambiguous and the provision with respect to payment “merely fixed the time of payment and did not create a condition precedent.”
Did the Defendant assume an absolute obligation to pay, though for convenience payment might be postponed until money was received by the Owner, or did Defendant’s obligation to pay arise only if and when the Owner made payment to the Defendant?
The judgment of the Appellate Division should be reversed. Defendant’s express obligation to pay money “as received from Owner”
· Defendant made an express obligation to pay the money “as received from the Owner,” and the event upon which that promise would ripen into an immediate obligation did not occur.
From the express promise to pay upon the happening of an event, an inference can be drawn that the parties did not intend that payment should be made if the event did not occur.
The Defendant would not profit by the Plaintiffs’ performance unless the Owner paid the specified price, but he shifted that risk to the Plaintiffs by conditioning his promise to pay them upon his receipt of the funds from the Owner