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Contracts • Excuse of Non-Performance
K#131
Legal Definition
Generally, strict compliance is required to satisfy a condition, except in the case of personal satisfaction of a party or third-party, in which any dissatisfaction must be honest and in good faith. If the condition deals with mechanical fitness, utility, or marketability, it must satisfy a reasonable person standard.
Plain English Explanation
Some conditions are objective and easy to determine whether or not they were achieved. For example, "If the Lakers beat the Clippers by more than 10 points, I will buy you pizza." Here, it is super simple to determine whether or not the condition is complied with, and so the condition must strictly be complied with. If the Lakers beat the Clippers by 9 points, the condition isn't met. Likewise, if the Lakers managed to almost score an extra 2 points, but they missed the buzzer -- it doesn't matter. "Close enough" isn't close enough.
Things get more complicated when it comes to personal satisfaction. For example, "I will sell you a pizza for $10, but you only have to pay me if you enjoy it." In this case, the condition is super subjective, so it is based on a good faith standard. This is hard to test on since it would need to include facts inferring whether or not the good faith standard was met. Also, note how this is perfectly acceptable in contract law, but contrast it to illusory contracts where when someone says, "I offer to pay you if I feel it was worth it" is not allowed. What's the difference? The difference is that the person creating the contract can't also be in charge of deciding whether or not they pay, but they can allow another party decide. In other words, an offeror is allowed to risk being paid for their service, but they aren't allowed to self-impose a power to not pay someone else.
Things get more complicated when it comes to personal satisfaction. For example, "I will sell you a pizza for $10, but you only have to pay me if you enjoy it." In this case, the condition is super subjective, so it is based on a good faith standard. This is hard to test on since it would need to include facts inferring whether or not the good faith standard was met. Also, note how this is perfectly acceptable in contract law, but contrast it to illusory contracts where when someone says, "I offer to pay you if I feel it was worth it" is not allowed. What's the difference? The difference is that the person creating the contract can't also be in charge of deciding whether or not they pay, but they can allow another party decide. In other words, an offeror is allowed to risk being paid for their service, but they aren't allowed to self-impose a power to not pay someone else.
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