Does a Condition Not Make Sense If the Party Subject to the Condition Can Ignore It?

Acme has an inventory of widgets. For whatever reason, the following is in a contract between Acme and WidgetCo:

It is a condition to Acme’s conducting a public sale of widgets that Acme notify WidgetCo in advance of the date and location of that sale.

Now compare that to the following:

To dispute a DynaCo invoice, XYZ must submit a Dispute Notice to DynaCo no later than five business days after XYZ receives that invoice.

Both of these sentences express conditions. They’re different in that the first sentence uses language of policy and the second uses language of obligation. But they’re also different in another way. Acme is in a position to conduct the public sale of widgets whether or not the condition has been satisfied. By contrast, the process of disputing a DynaCo invoice according the contract’s dispute mechanism can’t happen without DynaCo taking part.

That being the case, does it really make sense to state the first sentence as a condition? Should structuring something as a condition make sense only if the other party is in a position to act as gatekeeper?

Stated more generally, if a party that is subject to a condition is in a position to act as if the condition has been satisfied even if it in fact hasn’t been satisfied, should the issue in question instead be stated as an obligation? Here’s what the first sentence would look like stated as an obligation:

Before conducting a public sale of widgets, Acme shall notify WidgetCo in advance of the date and location of that sale.

Stating it as an obligation would make it clear what happens if Acme doesn’t notify WidgetCo. By contrast, if it’s stated as a condition and Acme doesn’t bother notifying WidgetCo, it’s not clear what the consequences are of ignoring a condition. Because the idea with conditions is that if you don’t satisfy a condition, whatever is subject to the condition doesn’t happen. You don’t also have a remedy if it the condition isn’t satisfied and whatever is subject to the condition happens anyway.

This is subtle “categories of contract language” stuff.

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.