Waiving Conditions Precedent

Conditions precedent present a variety of challenges for the law of contract, but one has proved especially vexing for Canadian courts. This is the question of when such a condition can be waived or extinguished unilaterally. The problem arises when a contract makes a transaction conditional on some event, but one of the parties subsequently decides that they wish to proceed with the transaction and insist on performance even if the event does not occur. Can that party waive the condition precedent, unilaterally extinguishing it and rendering the parties’ obligations to complete the transaction unconditional?<br><br>The Supreme Court first addressed this question in its much-maligned decision in Turney v. Zhilka, in 1959. Zhilka’s main legacy has been to describe a class of so-called “true” conditions precedent that cannot be waived unilaterally except by means of an explicit power of waiver. Courts tasked with deciding if a party without an explicit power of waiver can waive a condition precedent have, in the wake of Zhilka, approached the matter by asking if the condition is a “true” condition precedent. If it is, it cannot be waived.<br><br>I argue that the concept of a “true” condition precedent should be jettisoned from the common law. Whether a condition is a “true” condition precedent does not bear in any principled way upon whether it should or should not be waivable. I argue that the court in Zhilka did not intend for the concept to function as an arbiter of waivability. The concept has been made to perform a task that it was not designed to perform. Unsurprisingly, it is not performing it well.<br><br>Properly understood, the decision in Zhilka holds that a condition precedent cannot be waived absent a contractual power to waive it. This is a sound principle, but the court in Zhilka unduly restricted the circumstances in which such a power is present by assuming that it must be express. I argue that the power to waive a condition precedent is often implicit in the contract, and that such a power should be presumed to accompany all conditions precedent that are intended for the exclusive benefit of one party.