Legal Memorandum: Exclusivity Provision of a Contract in CT

Issue: In Connecticut, is performance under an exclusivity provision of a contract a condition precedent?

Two cases were located which generally require the conclusion that performance under exclusivity provisions of a contract is not considered to be a condition precedent to performance by the other party to the contract.

In Bristol Savings Bank v. Silver, 208 B.R. 100 (D. Conn. 1996), Bristol Savings Bank sought to garnish payments owed by a third party to Silver pursuant to a non-competition agreement.  Id. at 101.  In determining that the third party=s future obligations to Silver under the noncompetitioin agreement were sufficiently certain as to be garnishable, the United States District Court for the District of Connecticut found that the agreement represented an exchange of promises rather than a promise with a condition precedent.  Id. at 107.  In so holding the court cited 3A Arthur L. Corbin, Corbin on Contracts, Sec. 635 (1960 & Supp 1996).  Id.  Accordingly, Bristol Savings Bank stands for the proposition that a party=s agreement to refrain from competing with a party who makes  installment payments for the noncompetition covenant is ordinarily not a condition precedent to the payment obligation.  That is, under Bristol Savings Bank, the payor has the right to sue for breach in the event of competition rather than to cease making the payments.

Likewise, persuasive authority is found in Shakey=s Incorporated v. Covalt, 704 F.2d 426 (9th Cir. 1983), a franchisor sued a former franchisee for trademark infringement following the termination of the franchise relationship.  Id. at 428.  In the […]