The suspensive condition: examples and consequences
by Tine Peers
The suspensive condition is an essential concept in contract law that allows parties to make the commencement of an agreement dependent on a future, uncertain event. This offers parties flexibility and protection against unforeseen circumstances.
What is a suspensive condition?
A suspensive condition (or condition precedent) is a specific clause in an agreement that states the contract will only take effect when a certain future event occurs. Until that moment, the obligations of both parties are suspended. These conditions prevent parties from being unconditionally bound by a contract and provide protection when the future is uncertain.
In Belgium, the suspensive condition is codified in the Civil Code, Book 5, which deals with obligations and commitments.
Examples of suspensive conditions
Suspensive conditions can be applied in various situations and contexts. Here are some examples:
Financing arrangement clause: In a share transfer, a suspensive condition may stipulate that the transfer will only proceed if the buyer secures a mortgage loan.
Permit clause: In real estate transactions, it can be specified that the purchase is only final once the necessary permits have been obtained.
Legal implications and retroactive effect
If a suspensive condition is not fulfilled, the contract does not come into effect, and the parties are not bound by their contractual obligations. It is important that suspensive conditions are clearly and thoroughly defined to avoid legal misunderstandings and uncertainty. Furthermore, the fulfillment of a suspensive condition must not depend solely on the will of one party.
The retroactive effect of a suspensive condition means that when the condition is fulfilled, the obligation takes effect retroactively from the date the contract was entered into. This implies that the effects of the agreement are considered to have started from that earlier moment.
However, with the introduction of the new contract law, this automatic retroactive effect has been abolished. This means that, unless otherwise agreed, the effects of fulfilling the suspensive condition no longer automatically date back to when the contract was made. Parties can still contractually opt for a retroactive effect.
Conclusion
A suspensive condition allows parties to make their agreement dependent on a future, uncertain event. This protects them against unforeseen circumstances and prevents them from being unconditionally bound to the contract. It is crucial to formulate these conditions carefully and in detail, so both parties know exactly what is expected, and so that the fulfillment of the condition is not dependent on just one party. By properly applying suspensive conditions, parties can strengthen their legal position and better manage risks.
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Tine Peers
Manager Legal tine.peers@vdl.be
Disclaimer
In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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