A software developer was obligated in an exclusive distribution agreement to furnish the distributor with software updates and the distributor was to pay royalties. When the developer refused to supply a developed update, the distributor ceased paying royalties and the developer terminated the agreement.
The Court differentiated between independent, contingent and combined obligations. An independent obligation is one that need be made regardless the behavior of the other party. A contingent obligation first requires performance of the other party and combined (or parallel) obligations need be performed concurrently or at least both parties need to show unequivocal intention to perform. Usually a Court will not construe an obligation as parallel unless the agreement specifically set it as such. Although the agreement was silent as to such issue, the Court held that the refusal of the developer to supply the software update is what caused the distributor to cease paying and thus the developer was not entitled to terminate the agreement.
Nevertheless, the Court refused to enforce the agreement because in the case of an agreement between a manufacturer and a distributor, agent or franchiser it is required to have special relationship of trust and cooperation that cannot be enforced, especially in the case of an exclusive distributor. Thus, the Court will not enforce such an agreement and the only remedy will be monitory compensation, which may be sued.