THE DOCTRINE OF SUBSTANTIAL PERFORMANCE: CONDITIONS AND CONDITIONS PRECEDENT
| Author | Anthony BeckM.A |
| DOI | http://doi.org/10.1111/j.1468-2230.1975.tb01422.x |
| Date | 01 July 1975 |
| Published date | 01 July 1975 |
THE DOCTRINE
OF
SUBSTANTIAL
PERFORMANCE
:
CONDITIONS
AND
CONDITIONS PRECEDENT
THE
concept of
a
condition precedent has become
so
decayed in the
law
of
contract it
is
probably desirable to
fix
a
definition for this
discussion. The condition precedent was known to the common law,
at least in Lord Mansfield’s time,’
as
a
term
of
a
contract creating
an
obligation to be performed by one party to the contract, upon the
performance of which
a
further obligation arises on the side
of
the
other party. We
will
use the words only in this sense
in
this article.a
‘The phrase
“
entire obligation
”
has also been used at common law
with this meaning, and we will follow this usage by using the phrase
synonymously with condition precedent.
A
contract containing such
ir
term
as
the whole of one party’s obligation has become
known
as an
“
entire contract.” The obligation which comes into existence upon
performance of the condition precedent
will
be called
a
dependent
term.
“
Non-entire
”
seems preferable to divisible
for
other obligations
and contracts, the point being that there
is
no dependent term, not
necessarily that the consideration is divisible, pro rata by reference
to the contract price.
Entire contracts gave birth,
in
Dakin
v.
Lee
in
1915,
to the modern
doctrine of substantial performance, which it is submitted is the
subject of considerable confusion. Even if the doctrine
is
clearly
stated it appears
to
be illogical in itself, contrary to basic principles
of contract law and may occasion injustice. We
will
proceed by
illustrating the present confusion, seeing how it came about and
making recommendations for reform.
-
_-~~-___
-
1
For earlier references see Glanville Williams,
‘‘
Partial Performance
of
Entire
Contracts,”
(1941)
57
L.Q.R.
373,
376.
2
This was the meaning given in
Kingsfon
v.
Preston,rinfra.
Corbin calls this
a
“
promissory condition,”
Corbin
on
Conrracrs
(1951)
s.
633.
Where the condition
is
not the subject
of
a promise,
:s
in
Pym
V.
Campbell
(1856) 6
E.
&
B.
370,
Eng-
lish
law might use the phrase aleatory c:,ndition,” see this
U.S.
usage,
Corbin,
op.
cir.,
s.
728,
or
“suspensory condition offered by Anson,
Principles
of
the
English
Law
of
Contract
5th ed.
(1888),
p.
301.
The need
for
an expression was
felt in the
Eagle Aviation
case, see note
27
ifrfru.
The distinction was crucial
e.g.
in
Kingsion
v.
Ambrian
Znvestment
Co.
[I9751
1
W.L.R.
161.
3
e.g.
so used
per
Ashurst
J.
in
Cutter
v.
Powell
(1795)
6
T.R.
320.
Professor
Williams uses entire contracts to include lump sum contracts:
op.
cit.,
373.
This is
unjustifiable and confusing,
as
is shown
infra.
This conflation discounts his criticism
of
the remarks of Greer L.J. in
Eshelby
v.
Federared European
Bunk
Ltd.
op.
cif.,
386,
especially the curiously partial note
73.
He himself protests against the con-
flation at p.
392
but it was not in the law before
Dnkin
v.
Lee,
1915,
infra.
He finds
it in
Sumpter
v.
Hedges,
but appears not to have seen the full report in
67
L.J.Q.B.
at
p.
546
which refers only to an entire, not a lump
sum
contract. The report
in
(18981
1
Q.B.
673
is much shorter, probably inaccurate, and has done harm.
H.
Dnkin
&
Co.
Lid.
v.
Lee
[I9161
1
K.B.
566.
413
414
THE
MODERN LAW REVIEW
mol.
38
THE
CONFUSION
The
two
leading students' text-books contradict each other in stating
a doctrine
of
substantial performance: Cheshire and Fifoot,6 plainly
refers the doctrine to the area
of
entire contracts, Treitel sets the
doctrine among non-entire contracts. Both works derive their doctrine
from Lord Mansfield's famous judgment in
Boone
v.
Eyre
(1777),'
though Treitel adds that it is later discussion of that judgment which
has given rise to the doctrine rather than the actual words used by
Lord Mansfield. In fact, both
''
doctrines
"
have been recognised by
the
courts.
So
far as the latter is concerned, it is historically part and
parcel
of
the general doctrine
of
breach of condition
or
breach going
to the root
of
the contract.
On
the other hand, in
Bolton
v.
Muhadeva
in 1972, the
Court
of Appeal were influenced by Cheshire and Fifoot's
theory, and achieved
it
is submitted a climax of jurisprudential con-
fusion and potential injustice
by
holding that
a
failure of substantial
performance
in
a
"
lump sum
"
contract deprived the contractor of
all
relief. Logically,
a
condition
is
a
contractual obligation any breach
of
which terminates
all
further obligations at the other party's positive
election, while a condition precedent
is
an obligation which only
requires another obligation to arise
if
the condition precedent
is
fulfilled. We will examine the alleged basis of a doctrine
of
substantial
performance with respect to each kind
of
obligation. It appears that
the doctrine as stated by the
Court
of Appeal
in
Bolton
v.
Muhadeva
is
unjustifiable as well as undesirable. Interestingly, *the confusion has
its roots deep
in
much of the nineteenth-century development
of
the
modem law of contract, but we will touch only on such parts
of
it
as are essential to
our
theme.
''
SUBSTANTIAL PERFORMANCE
"
WITH
REGARD
TO
ENTIRE
CONTRACTS
The early common law was that promises in
a
contract were indepen-
dent,
so
that failure to perform his obligation by one party did not
relieve the other party who was still obliged to
carry
out his obligation
and could obtain damages
for
the non-performance.
If
both parties
were in breach and one sued, the other could claim damages by a
cross-action but had no defence to the principal action by reason of
the plaintiff's breach
of
contract.'
Lord
Msansfield was responsible
for limiting this rule. The reason
for
the limitation was that
a
cross-
action for damages might not prove adequate relief and the other
5
8th ed.
p.
524. See also
Smith's
Leading
Cases,
13th ed. (1929),
p.
16. The
latter discussion is far from clear, but
is
surely eccentric and unjustified in distin-
guishing a dependent covenant situation from an entire obligation situation.
6
3rd ed.,
p.
690. Corbin's treatment
is
similar,
op.
cit.
s.
709 and
s.
946 note
5.
1
There were two actions with similar facts between the two parties. The passage
usually quoted is to be found in (1777)
1
H.Bl. 273n (K.B.). The later case
is
in
(1779)
2
Wm. Black. 1312 (C.P.).
8
[1972]
1
W.L.R.
1009.
9
Selections from the Revised Edition of Williston,
Law
of
Confrucfs
(1938),
S.
816.
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