Condition or Obligation?

If you’re not attuned to the nuances of categories of contract language, you may well overlook the distinction between conditions and obligations. That can lead to real unhappiness, given that the consequences of failing to satisfy a condition are very different from the consequences of breaching an obligation.

In that regard, here’s a provision that I spotted on the SEC’s EDGAR system:

Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days’ prior written notice to Lender and not including any disclaimer of the insurer’s liability for failure to give such a notice.

Condition or obligation? I have no idea. This provision uses will, which I recommend you use only in language of policy with respect to a contingent future event. To express it as an obligation, I’d say shall deliver. To express it as a condition, I could one of the three ways to express conditions. Here’s one: It is a condition to _________ that Grantor, at the request of Lender, delivers ___________. Here’s another: To ____________, the Grantor must, at the request of Lender, deliver ___________.

If it’s not clear whether something is a condition or an obligation, you can expect a court to hold that it’s an obligation.

For more on the distinction between conditions and obligations, see MSCD and this April 2007 post and this January 2007 post on AdamsDrafting. For a complete discussion of categories of contract language, see chapter 2 of MSCD.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.