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, valued at over $62,000, 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, and the trial court granted Federal summary judgment.
Issue
Did the trial court err in granting summary judgment by concluding that the contract's receipt requirement was an unfulfilled condition precedent to Federal's liability, without considering whether its non-occurrence should be excused to avoid disproportionate forfeiture?
Holding
The appellate court reversed the trial court's grant of summary judgment and remanded the case for further proceedings. It held that the trial court failed to conduct the necessary analysis under Restatement (Second) of Contracts § 229 to determine the purpose of the receipt requirement and whether its non-occurrence would cause a disproportionate forfeiture.
Rule
A contract clause stating responsibility 'shall begin when... accepted and receipted for' constitutes a condition precedent. However, 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, as per Restatement (Second) of Contracts § 229.
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