Nolan v. Whitney
Court of Appeals of New York 88 N.Y. 648 (1882)
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.
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.
May a party acting in good faith and substantially completing a contract recover for their work? I.e. is the condition excused?
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).