Contracts-Conditions to Performance
Once a contract has been entered into, the parties are obviously interested in the performance of the contract. It is not unusual, however, that there are certain conditions imposed on one or both parties before performance is necessary. For example, in your typical homeowners insurance contract, a condition that you must satisfy before your insurance company is obliged to make any payments to you is to provide a sworn proof of loss statement itemizing the damage that you are claiming. The insurance company also has the right to examine you under oath as to that claim. Once those conditions have been satisfied, the insurance company has an obligation to pay you for the damages incurred that are covered by your policy.
Sometimes those conditions within the contract may be the subject of what is referred to as waiver or estoppel. A condition may be waived if the insurance company informs you that you do not have to comply with that condition. A waiver is a relinquishment of a known right. If the insurance company has a right to require that you file a written proof of loss and they expressly waive that or tell you that you do not have to file a written proof of loss, then that constitutes a waiver of that condition.
In some instances, a party may be estopped from requesting that the conditions be satisfied. For instance, again referring to the insurance claim, if the insurance adjuster handling the matter told you that he would complete the proof of loss form and then submit it to you for your signature within the time allowed by the contract and you relied upon that representation, then the insurance carrier may be estopped from denying coverage to you for failing to have filed the proof of loss form within the time allowed.
An estoppel arises when a party makes a representation and the other party relies upon that representation to his or her detriment. In the example, the insurance adjuster represented that he would complete the proof of loss form. You relied upon that, and as a result of that adjuster’s failure to do what he said he would do, your proof of loss form was not submitted in a timely fashion. In that circumstance, the insurance company would be estopped from denying your claim for failing to comply with the condition.
