Nolan v. Whitney
Court of Appeals of New York 88 N.Y. 648 (1882)

Facts:

Nolan agreed to do mason work for Whitney. He would be paid in installments, with the last payment of $2,700 conditioned upon an architect, M.J. Morrill’s, written satisfaction.

  • Whitney refused to pay the last installment, arguing that he never obtained the architect’s certificate, and that the work wasn’t done according to its requirements.

History:

The lower court ruled in favor of Nolan, but deducted $200 for defects in the plastering.

  • The court held that Nolan completed what was required and performed in good faith.

Issue:

May a party acting in good faith and substantially completing a contract recover for their work? I.e. is the condition excused?

Holding:

Yes. Affirmed.

Reasoning:

An unreasonable refusal on the part of an architect in such a case to give the certificate dispenses with its necessity.

Minority 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 an objective standard when a benefit would otherwise be received by the party without payment, unless the contract provides otherwise.

  • Under the minority rule, when a benefit would not otherwise be received without payment, a subjective standard applies (just like the majority rule).