First Principles of Business Law
Performance and breach of contract

5. Assessing the seriousness of a breach of contract

5.2. 'Conditions' in a contract

 

 

 

Read the facts and the question and then choose the best answer.

A enters into a contract with B to lease a building owned by B. The contract states that A will use the building as a restaurant. The contract also states that B 'undertakes to apply for and obtain, within six weeks of signing the contract, all the necessary permits for the building to be used as a restaurant'. Only the owner of the building is able to make the necessary applications, and without the permits it would be unlawful to operate a restaurant from the building. B fails to apply for, or obtain, any of the necessary permits.  Which of the following statements is correct?

(a) It can reasonably be inferred from the circumstances that A would not have leased B's building without B's promise to obtain the necessary permits and this must have been apparent to B. These facts makes B's promise to obtain the permits a fundamentally important term of the contract, known as a 'condition' .

(b) It cannot reasonably be inferred from the circumstances that A would not have leased B's building without B's promise to obtain the necessary permits. Therefore, B's promise to obtain the permits is not a fundamentally important term ('condition') of the contract.

 

 

 

 

 

 

 

 

  

 

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