F. When Is a Contractual “Condition” Not a True Condition?

AuthorJohn D. McCamus
ProfessionProfessor of Law. Osgoode Hall Law School, York University
Pages636-639

Page 636

It is trite law that the parties can effectively stipulate that the breach of a particular provision will entitle the party not at fault to disaffirm the contract and refuse further performance, preserving, at the same time, a right to sue for damages flowing from the breach. Where such arrangements are spelled out plainly and in detail, courts will have little difficulty interpreting and applying them. A common drafting technique, however, for achieving this objective is simply to stipulate that the following undertakings of a party or the parties are "conditions" of this agreement. We may ask, then, whether this common, though less explicit, drafting

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device will invariably achieve the desired objective. Where, on the particular facts, the effect of such a provision appears oppressive, we may expect that courts would incline against an interpretation that achieves such a result. This problem arose in the English decision in L. Schuler A.G. v. Wickman Machine Tool Sales Ltd.48The defendant Schuler, a German manufacturing firm, had granted the plaintiff Wickman exclusive distribution rights for certain of its products in a territory that included the United Kingdom. In order to ensure that vigorous marketing efforts directed at car manufacturers would be undertaken by Wickman, Schuler stipulated in the agreement as follows:

7. Promotion [Wickman]

(a) Subject to Clause 17 [Wickman] will use its best endeavours to promote and extend the sale of Schuler products in the Territory.

(b) It shall be condition of this Agreement that:

(i) [Wickman] shall send its representatives to visit six [largest U.K. car manufacturers] at least once in every week for the purpose of soliciting orders for panel presses;

(ii) that the same representative shall visit each firm on each occasion unless there are unavoidable reasons preventing the visit from being made by that representative in which case the visit shall be made by an alternative representative and [Wickman] will ensure that such a visit is always made by the same alternate representative.49

When Wickman failed to comply strictly with its obligations under 7(b) by missing a few visits, Schuler terminated the agreement on the basis that the missed visits constituted a breach of condition and entitled Schuler to bring the agreement to an end. Wickman’s claim for damages, however, enjoyed success. In the Court of Appeal, Lord Denning M.R. distinguished the technical or legal meanings...

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