Many agreements contain condition precedent clauses which must be satisfied to trigger other performance obligations in the contract. Generally, a condition precedent is “an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises….”1 Indeed, agreements may contain conditions precedent to the formation and enforceability of that very contract. Others can establish requirements for the right to commence litigation. Undoubtedly, whether a clause amounts to a condition precedent can have significant ramifications for the parties’ rights and remedies.
In light of the significant impact conditions precedent can have, New York courts generally are strict in construing whether a contractual provision constitutes such a condition. Courts will find a condition precedent to exist where the language of the agreement clearly indicates that parties intended such.2 When ambiguity creeps into the language, however, efforts to convince the court to construe it as a condition precedent may fail regardless of the availability of parol evidence. Several recent Commercial Division decisions demonstrate the application of these principles.
