Suspensive condition - mandatory features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Non-standard situations require the same approach from the parties to the contract. In some cases, in order to sell or produce something, it will be necessary to conclude a deal with a suspensive condition, that is, to make certain circumstances dependent on a specific situation.

Definition of the term in legislation

The term is clearly defined in the Civil Code. A suspensive condition is a specific situation that arises under certain circumstances that are agreed upon in the contract by the parties. A circumstance can be not only a right, but also an obligation. After the event provided for in the transaction occurs, the transaction is recognized as completed.

A suspensive condition may provide for both the legal behavior of one of the parties, and the illegal one. For example, if one of the parties to the contract violates the current legislation, customs or tax, the other party has the right to unilaterally withdraw from the transaction.

The condition can be random or potestative. In the first case, these are the actions of third parties. In other words, these are external circumstances on which both parties depend. A potestative is a condition that depends entirely on the actions of one of theparties to the transaction. There may be a mixed condition in the contract, when rights arise not only in the case of the actions of one of the parties, but also depend on the actions of state bodies or the forces of nature.

Signs

Suspensive conditions have a number of features, to be more precise:

• in the transaction, the time of occurrence of a specific case is determined;
• contract describes some circumstances;
• the parties are not sure that events will occur that will lead to the onset of the agreed conditions;
• The occurrence of the specified situations is possible, but not necessary.

Timing

When concluding a contract, the fact of a certain event should not have a 100% guarantee. Otherwise, such a condition will be considered as the need to comply with a certain period. In fact, the suspensive condition should only provide for the possibility of such an event occurring.

It is important to know that the deadline for fulfilling obligations may depend on certain actions that one of the parties must take.

Examples

One of the brightest examples is the rent agreement. In this case, the execution of the suspensive condition will be the death of the renter or the full performance of all payments by the rent payer, in the amount of the redemption price.

Under the suspensive condition of the party, installment payments can also act. In fact, rights arise only after all payments for the delivered goods or performedservices.

If we talk about a mortgage agreement, then, despite the registration of such a transaction and the receipt by the borrower of all rights to real estate, until the debt to the bank is paid, there will be an encumbrance on the property. The buyer of housing in this case will receive his right to possession only after the full repayment of the debt, and until that moment, he is not en titled to sell or carry out other legally significant actions with real estate.

A bank guarantee is to conclude an agreement under a suspensive condition. Thanks to an agreement with a financial institution, legal entities get the opportunity to work with a deferred payment. In most cases, it is possible to conclude a deal with state-owned enterprises or institutions only if there is a guarantor bank. In this case, the date of occurrence of the deferred condition is the failure of the enterprise to fulfill its obligations, for which the bank has vouched. Although there is no 100% guarantee that this date will come. If the company has not paid off or has not fulfilled other obligations, then the bank makes a payment in favor of the beneficiary, and the applicant receives the status of a debtor.

Suspensive conditions can also be provided for in a regular contract for the sale of housing. For example, such documentation may come into force only after full settlements between the parties, as evidenced by the appropriate notarization on the document. Simply put, at the time of signing the papers, a partial payment is made, but the buyer will be able to register his rights only after the full payment of the cost of housing. As a rule, in suchcontracts provide for a clear date for repayment of the debt.

Separately, donation agreements should be noted. Despite the fact that such transactions are gratuitous, it is not excluded that the donor establishes certain conditions for receiving the gift. For example, one of the parties promised to transfer the vehicle to the recipient after 2 years from the date of the transaction, but only if he does not have a child in his family. Then the transfer of the gift is delayed for another 2 years. In fact, it is impossible to unambiguously plan the birth of a child, therefore, the condition is suspensive.

In closing

It should be remembered that not only a certain event, but also volitional actions can act as a suspensive condition. Dependence can be placed not only on the actions of the parties to the transaction, but also on third parties.