Constructive Conditions

In the interest of fairness a court will sometimes imply certain events (performances) to be conditions that must be fulfilled prior to the rendering of future performance. That is the case, for example, when the parties have agreed to what duties are expected of each other but have not provided a sequence of performance for those duties. Example: A agrees to pay B and B agrees to build A’s house, but there is no payment schedule.

A.

A party’s performance is a constructive condition to the performance of the other party’s stated subsequent duties.

B.

Order of Performance Not Agreed Upon:

1.
If exchange of performances can be rendered simultaneously, then courts view the performances as constructive concurrent conditions, i.e., conditions precedent to each other, and both must be performed simultaneously. (Rest. 2d. § 234(1).)

2.
If the performance of one party requires a longer period of time, his performance is usually due first and is a constructive condition precedent to the other’s performance. (Rest. 2d. § 234(2).)

3.
Where a contract is made to perform work and no agreement is made as to time of payment, the work must be substantially performed before payment can be demanded.

C. Bilateral Contracts

The modern rule is that there is a presumption that mutual promises in a contract are dependent and are to be so regarded whenever possible.