Grenier v. Compratt Constr. Co.
Supreme Court of Connecticut 454 A.2d 1289 (Conn. 1983)

Facts:

The parties entered into an agreement that entitled the Greniers to $25,500 upon the completion of certain subdivision roads. There were two conditions:

(1) The roads had to be completed by June 30, and

(2) a certificate of occupancy, signed by the City engineer, had to be delivered to Compratt.

  • There was also a liquidated damages clause.

The roads were completed, but written certification couldn’t be obtained, because the City engineer didn’t write those kinds of letters.

  • Instead, the Greniers got a written letter from the assistant city attorney on July 10th.

History:

The trial court awarded the Greniers $23,000:

  • The city attorney’s letter constituted compliance with the contract.
  • Although the parties bargained for written compliance from the engineer, the major concern was not the letter itself, but what the letter represented – whether the roads were acceptable so that a certificate of occupancy could be issued.
  • The court also noted the delay of the letter and that D was somewhat damaged by this, so the judgment was reduced.
  • The court held the liquidated damages provision to be invalid, but still used its measure).

Issue:

Should the court excuse the non-performance of obtaining the engineer’s approval?

Holding:

Yes. Affirmed.

Reasoning:

  • Restatement Section 271: The occurrence of a condition may be excused in the event of impractibality if the occurrence of the condition is (1) not a material part of the agreed exchange, and (2) forfeiture would otherwise result.
  • Here, the third party refused to issue the letter because it was not the city engineer’s job to do so.
  • The material part of the condition wasn’t the paper itself, but what the paper represented – quality work.

Majority rule: When a condition to a party’s performance is the satisfaction of a third party with respect to the other party’s performance or something else, the satisfaction clause will be construed under a subjective standard, unless the contract provides otherwise.

Note: Substantial performance does NOT work with express conditions.