Contracts for the sale of land or goods often impose “conditions precedent.” This means something must occur before a claim or duty arises. There are many distinct types of these provisions, but a fairly standard condition precedent clause reads as follows:

“If Party A fails to comply with any provision of this contract, Party B shall deliver a notice to Party A that specifies the non-compliance. Party A shall have three days upon receipt of the notice to cure the non-compliance specified in the notice. If the non-compliance is not cured, the failure to comply then becomes a breach of contract.”

The notice to cure, usually required to be in writing, is the “condition precedent” that must occur before a breach of contract claim, for example, may arise. A condition precedent provision is not normally clearly labeled, so it is imperative to carefully read contractual agreements before signing them.

For example, an operative contract requires Party A to deliver unique, and otherwise unavailable, widgets to Party B by 10 PM on January 1. On January 5, Party A still has not delivered the widgets. Party B must give notice to Party A, usually in writing, that it has not complied with the terms of the contract because it has not delivered the widgets to Party B. If Party A does not deliver the 10 widgets to Party B within 3 days, Party B may pursue a breach of contract claim, or some equivalent claim against Party A.

Expanding the concept, the facts are the same, except on January 5, Party B learns that Party A sold the widgets to another customer, and the widgets are no longer available. Party B may not deliver a notice as Party A knows they were supposed to deliver the widgets to Party B and now they are not available. Party B may consider skipping the condition precedent, in part because Party A cannot cure the default. The widgets are gone, and Party B may believe its only option is to sue.

Arizona adopted the “doctrine of futility.” This Arizona law does not require a party to commit a useless or futile act. However, case law is evolving, and it is trending toward strict compliance of contractual terms. If Party B declines to perform the condition precedent by failing to deliver a notice, and skips right to a lawsuit, Party B’s lawsuit may be subject to dismissal because it failed to perform the condition precedent, which was delivering the notice of non-compliance.

While the Arizona courts have not fully eliminated the futility doctrine, the circumstances in which courts will find futility existed are becoming increasingly limited. Trends seem to suggest that courts are less likely to excuse parties from condition precedent based on the doctrine of futility. And, it may very well be true that delivering a notice would be futile. The best practice is to deliver the notice, regardless of futility, while continuing to explore your legal options. Consulting with an experienced commercial litigator will help you answer many questions about how and when you can pursue a lawsuit or claim against the non-complying party.