A. Introduction

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 615-617

Page 615

Parties to enforceable agreements will often require an answer to either one or both of two interrelated questions. First, if an agreement does not plainly stipulate the order in which the performance of the respective parties is to occur, a party may wish to know whether its performance of a particular obligation must precede the other party’s performance of its corresponding obligation. Thus, a party that has agreed to make a payment in return for the performance of certain services may wish to know whether the payment is required to be made before the provision of the services or only after they have been received. A second issue that may arise relates to the ability of a "victim" of a breach of contract (also referred to here as the "innocent party" or "the party not at fault" or "not in default") to bring an end to a contractual relationship on the basis of the other party’s breach. An employer, for example, may wish to know whether certain breaches of the employment contract on the part of the employee entitle the employer to terminate the employment relationship. Again, this issue could be the subject of stipulation in the employment contract. In the absence of such a provision, however, the common law must be able to determine whether the innocent party is entitled to terminate the agreement on the basis of the other party’s breach of contract.

These two rather different issues are interrelated for the following reasons. In determining the order of performance required by the con-

Page 616

tract, one will also, as a consequence, identify circumstances in which a failure to perform by one party will provide the other party with a basis for withholding performance or, indeed, terminating the agreement. Thus, in the context of an agreement under which a payer agrees to pay money in return for services to be provided by the other party, if it is determined that the provision of services must precede payment, it will follow that a failure by the service provider to provide the contractually required services will provide the payer with a basis for refusing to make payment and to terminate the contractual relationship. Under traditional doctrine, both of these sets of issues were determined on the basis of whether the particular provisions of the agreement in issue were properly classified as either "conditions" or as mere "warranties." In determining whether a breach of contract would entitle the other party to terminate the...