Conditional Delivery of Written Contracts

Abstract

Two parties are negotiating the terms of a contract, involving perhaps a sale, a promissory note, a lease or other conveyance of an interest in land. They draw up a formal document in writing, full and complete in all of its aspects. They sign and in some cases attach a seal. Then it is delivered by one party to the other, with the clear oral statement that the document is not to be binding on him unless A approves the deal, or that his duty thereunder is to be conditional on B's signing also, or that the rent provided in the instrument is to be payable only after certain repairs have been made, or that the document is to be null and void if C shall disapprove. Or one of the parties to the document delivers it to a third person, with a clear oral direction to such third person to deliver it over to the promisee or grantee only upon his paying a sum of money or upon the happening of some other condition. What are the legal relations of the parties before the happening of the condition? Has a "valid" contract been made? Is the written paper a "contract"? If the obligee sues on the -writtend ocument is proof of the oral statement as to the condition precedent prevented by the parol evidence rule? If a sealed instrument is delivered to a third person, to be delivered to the grantee or obligee on a parol condition, it is called an escrow. What is an escrow? Is an escrow a deed or a contract or a mere piece of paper? What legal relations does delivery of an escrow create?