How about that ‘suspensive condition’?

“I’ve bought and sold a few houses in my time and have always seen provision being made for a suspensive condition such as that the agreement is subject to a home loan being obtained. I’ve got the gist of what it means, but have never felt like I can explain it to someone else. Can you break it down for me?”

It is true that a suspensive condition or condition precedent (same thing) can appear quite daunting and legalistic to understand. It is also true that it appears quite regularly in contracts and can have important consequences if not properly understood or managed by the parties.

A suspensive condition can be described as a condition that suspends the full operation of the contract and makes it subject to the occurrence of a future event. Importantly though, a contract which is subject to a suspensive condition is valid from the time it was concluded but is ‘suspended’ until such time as the condition has been fulfilled. Once the condition has been met as required by the contract, the contract is no longer ‘suspended’ but is of full force and effect.

But what happens then when the condition is not fulfilled as required by the contract? Well, in this case, our courts have determined that non-fulfilment of a suspensive condition renders the agreement void from the start and of no legal effect. This means that our courts effectively view the contract as never having existed and the parties must be restored to that position i.e. as they were before the contract was concluded.

As you can see from the above, a suspensive condition can have serious consequences and should not be taken lightly. Often the suspensive condition provisions also contain very specific requirements which if not met in full could lead to a disastrous consequence of an agreement being void from the start even though both parties did not have such an intention! So, mind the suspensive condition when you encounter it again and afford it the respect it deserves.

April 11, 2019
International: Privacy by Design – prioritizing security in business

International: Privacy by Design – prioritizing security in business

In today’s current digital space, safeguarding privacy and ensuring that your business is compliant with the various cyber laws and data privacy regulations is crucial to ensure that business operations are well protected. In this article, PR de Wet and Mishka Cassim, from VDT Attorneys Inc., seek to address some of the most important issues companies face and need to consider on a global scale when addressing privacy concerns.

South Africa: POPIA and prior authorisation to process personal information

South Africa: POPIA and prior authorisation to process personal information

The Protection of Personal Information Act, 2013 (Act 4 of 2013) (‘POPIA’) requires a responsible party to apply for and obtain authorisation prior to processing certain identified categories of personal information. With POPIA compliance deadlines fast approaching PR de Wet and Hayley Levey, from VDT Attorneys Inc, analyse the POPIA prior authorisation regime.

Sign up to our newsletter

Pin It on Pinterest