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Chapter 16 drew the distinction between the nonfulfillment of a condition, which excuses the conditional performance, and the failure to honor a promise, which results in liability for breach of contract. If a term is a promissory condition—that is, one of the parties undertook that it would be satisfied—its nonfulfillment has the combined effect of entitling the other party (called the “promisee” in this chapter) both to withhold performance and to seek a remedy for breach. Chapter 16 concentrated on the effect of conditions and their nonfulfillment. This chapter considers the impact and consequences of the breach of a promise. Because promises are so often conditions as well (promissory conditions), a failure to perform often constitutes both a breach of the promise and nonfulfillment of a condition. This means that where a term of a contract is both a promise and a condition (a promissory condition), a material and total breach of the promise is also the nonfulfillment of the condition, which entitles the promisee not only to sue for damages for the breach, but also to withhold her own performance that is contingent on the promissory condition.
This concept is illustrated by the following simple contract, which we will use as an example throughout this chapter: Substantial Preforming Company, Inc. (Substantial) salvages building materials, such as brick, stone, and concrete from demolished buildings. It then has these materials crushed so that it can use them for making columns, walls, and other building components for use in new buildings. Total Material Breakers, Inc. (Total) operates a plant for crushing building materials. On July 1, Total and Substantial entered into a written contract under which Total undertook to crush a load of concrete that Substantial had hauled away from a demolition site. The contract contained the following terms:
Substantial agrees to pay Total $20,000 for the work. Substantial will pay $5,000 of this price to Total by 5 p.m. on July 6, and will pay the balance of $15,000 upon collecting the crushed concrete from Total.
Substantial will deliver the salvaged concrete to Total for crushing by 9 a.m. on July 7.
Total will complete the crushing and have the materials ready for collection by 5 p.m. on July 9.