Conditions precedent in a contract & effect of failure to satisfy them - exceptions

Conditions precedent in contracts & waiver thereof

A party seeking to enforce a contract bears the burden of proving that all conditions precedent have been satisfied. Mensa-Wilmont v. Smith Int’l, Inc., 312 S.W.3d 771, 781 (Tex. App.—Houston [1st Dist.] 2009, no pet.). When a party’s obligation under the contract is conditioned upon the happening of a future event, the condition must be performed or fulfilled exactly as set forth in the contract before the promise can be enforced. Centex Corp. v. Dalton, 840 S.W.2d 952, 956 (Tex. 1992); Beard Family P’ship v. Commercial Indem. Ins. Co., 116 S.W.3d 839, 844 (Tex. App.—Austin 2003, no pet.).

Exceptional circumstances and other reasons for avoidance

Courts may excuse compliance with a condition precedent if requiring its performance will cause extreme forfeiture or penalty and if its existence or occurrence is not an essential part of the parties’ bargained-for exchange. See Lesikar Const. Co. v. Acoustex, Inc., 509 S.W.2d 877, 881 (Tex. App.—Fort Worth 1974, writ ref. n.r.e.).

Waiver of conditions precedent

The failure of a condition precedent may also be waived by the failure to insist on performance. Ames v. Great S. Bank, 672 S.W.2d 447, 449 (Tex. 1984); Farmer v. Holley, 237 S.W.3d 758, 760 (Tex. App.—Waco 2007, pet. denied). Waiver is an affirmative defense and is defined as the intentional relinquishment of a known right or intentional conduct inconsistent with claiming it. Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987); Straus v. Kirby Court Corp., 909 S.W.2d 105, 108 (Tex. App.—Houston [14th Dist.] 1995, writ denied). To prove waiver, a party must show that the other party to the contract had knowledge of the right and remained silent or inactive for an unreasonable period of time. See Tenneco, Inc. v. Enter. Prod. Co., 925 S.W.2d 640, 643 (Tex. 1996). Waiver may also be satisfied by showing intentional conduct inconsistent with the claim of right. Sun Exploration, 728 S.W.2d at 37. Waiver is ordinarily a fact question. Tenneco, 925 S.W.2d at 643. Because waiver is largely a matter of intent, it will not be implied absent a clear intent expressed in words, acts, or conduct. See EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996).

SOURCE: Houston Court of Appeals - 01-10-00042-CV - 8/4/11