Acme Markets, Inc. v. Federal Armored Express, Inc.
648 A.2d 1218 · Superior Court of Pennsylvania · 1994
Facts
Acme Markets contracted with Federal Armored Express for cash transport. A Federal employee was robbed of Acme's cashbag after taking possession but before providing a receipt. Federal denied liability, citing a contract clause requiring both acceptance and a receipt for responsibility to begin, which the trial court deemed a condition precedent.
Issue
Did the trial court err in granting summary judgment to Federal by failing to consider whether the non-occurrence of the receipt condition precedent would cause a disproportionate forfeiture, and if the receipt requirement was a material part of the contract?
Holding
The appellate court reversed the grant of summary judgment and remanded the case. The trial court must conduct an evidentiary hearing to determine the purpose and materiality of the receipt requirement and to conduct the necessary weighing analysis regarding disproportionate forfeiture.
Rule
A condition precedent must occur before a duty to perform arises, and while no specific words are needed, the intent must be clear. Under Restatement (Second) of Contracts § 229, a court may excuse the non-occurrence of a condition if it would cause disproportionate forfeiture, unless its occurrence was a material part of the agreed exchange.
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