Hey everyone, pardon the delay for this week’s Draw the Law. Last week, rejection and counteroffer were discussed for Contract Law. This week is important for those of you negotiating the terms and conditions of your agreements.
Are Terms and Conditions the Same?
No. I have had a lot of small business people assume when they see “Terms and Conditions” assume that the two words are the same. They are not, and this one of those cases your attorney is not being redundant. While, the terms are negotiated for what is a part of the deal, a condition is an event that must occur before either party is required to perform their promise.
Conditions in contracts land is the same way as what you remember in grammar school, it is those “if, then” statements. For example:
If you remember how conditional sentences work, then you will understand that this sentence is one.
Therefore, if a store owner requires supplies to be delivered by a specific date, and the supplier accepts that condition, the date of delivery is a condition of the contract.
Uncertainty and Conditions
Many times, conditions involve a degree of uncertainty, which are not under the control of the parties. Nonetheless, the condition must be fulfilled in order for the contract to go forward. With uncertainty at play, generally someone who is experienced in the trade or industry will come up with a contingency to deal with those kinds of issues.
Let’s use a store owner who sells poke bowls and fish bentos and a fisherman to illustrate this situation. Fish prices fluctuate base on the fisherman’s catch, but the store owner generally has a static price for their poke bowls and bentos. The fisherman knows that, so he sets a price, but says he can supply whatever fish he wants at that price. Under this contract, both the fisherman and store owner are locked into that price.
Now, let’s say the owner gets very cheap and picky. He wants an exotic fish for his prized bentos. The fisherman is experienced, but is unsure if he can supply the said fish. Therefore, the fisherman states that he will sell the exotic fish, contingent on if he can catch them. This condition gives the fisherman an escape, should he be unable to catch the fish. There would be no obligation to perform because the condition has not been met.
As a negotiation or pricing strategy, the fishermen may offer other fish at a reduced price to the store owner, should he be unable to catch the exotic fish.
For you Law Students or Legalese Geeks
For those of you who are really into technical legal writing, understand that there are types of conditions as well. There is a condition precedent and a condition subsequent.
A condition precedent is an event that must occur before any contractual duty arises. Thus, with the case of the fishermen he will only sale if he catches the fish.
A condition subsequent marks the end to one's legal rights or duties. This is often explained with the case of providing a music hall for a musical performance, where the music hall burned down frustrating the purpose of the contract. Therefore, the music hall owners ended their obligation to provide a hall to the performer when it burned down.
*Disclaimer: This post discusses general legal issues, but does not constitute legal advice in any respect. No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction. Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.