Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co.

New York Court of Appeals · 1995 · Contracts

Contractsconditionsexpress conditionwaiversubleasecondition precedentexpress conditionsubstantial performance

Facts

The parties signed a conditional letter agreement for a sublease of plaintiff's former office space. The agreement stated that the parties would not execute or exchange the sublease unless and until plaintiff delivered the prime landlord's written consent to defendant's proposed tenant work by a specified deadline, and if that did not occur the agreement and sublease would be null and void. After written extensions, plaintiff did not deliver the written consent by the final deadline of February 25, 1987; instead, plaintiff's attorney gave oral notice by telephone that day that consent had been secured. The written consent was not received by plaintiff until March 20, and defendant then treated the agreement and sublease as invalid.

Issue

Whether the doctrine of substantial performance can excuse plaintiff's failure to timely deliver the prime landlord's written consent where the agreement used unmistakable conditional language making timely written delivery an express condition precedent to the formation or existence of the sublease.

Rule

When parties use unmistakable language such as "if" and "unless and until" to create an express condition precedent, that condition must be literally performed. The doctrine of substantial performance ordinarily applies to constructive conditions or promises, not to the nonoccurrence of an express condition precedent; relief, if any, must come through excuse of the condition, such as waiver, breach, or forfeiture, not through a materiality or substantiality analysis.

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In Seattle, Rowan Street Advisors and Harbor Lantern Media signed a letter agreement for a sublease of office space. The agreement stated that there would be no binding sublease "unless and until" Rowan delivered the building owner's written approval of Harbor Lantern's proposed server-room alterations by April 15, and that if approval was not received by then the deal would be "null and void." On April 15, Rowan's lawyer left a voicemail saying approval had been obtained, but the written approval was delivered on April 18.

If Harbor Lantern refuses to proceed, which result is most consistent with the governing rule?

Explanation. Unmistakable conditional language such as "unless and until" and a clause making the agreement "null and void" creates an express condition precedent. Such a condition must be literally performed, and substantial performance ordinarily does not excuse its nonoccurrence. Timely oral notice is not the equivalent of timely delivery of the required writing.