Condition Suspensive Agreement

In the most recent case in Kawalya-Kagwa v. Development Bank of Southern Africa [2017], the respondent employed the applicant in a management position under a fixed-term contract, provided that he obtained a valid work permit. When the applicant`s work permit application was blocked, he suggested that he should continue to work for the defendant without pay until he received his permit (i.e., a condition precedent). The respondent agreed with this proposal, but set a time limit after which the applicant`s services would be terminated “with immediate effect”. When the plaintiff finally presented the defendant with a copy of his work permit, his appointment was confirmed. However, the defendant subsequently expressed doubts as to the authenticity of the permit and informed the applicant that he did not have to report to the service. His salary was cut. Example: The contract only comes into effect when the buyer has secured the financing, think e.B. of a financing reservation in a purchase contract. One could also think of subsidies, which may or may not be granted, or obtaining the necessary permits.

Example: Company X submits a job offer to Mr Y on 1 December provided that Mr Y presents proof of qualification to the company by 31 December at the latest. If Mr. Y does not provide proof of his qualifications by December 31, the offer of employment (and its acceptance) is null and void, as if such an offer had never been made (and/or accepted). If a deed of sale is subject to a condition precedent, it expires if this condition is not fulfilled in time. This was confirmed in Marais v. Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C) (hereinafter referred to as “the Marais case”). There is then no contract for the sale of the property between the two parties and the seller can sell the property to another buyer. 3. In the event of dismissal, the worker shall be informed of the reason for the dismissal and of the right to refer the matter to a competent council or to the Commission or to the dispute settlement procedures provided for in a collective agreement.

Most people who have bought a property may have noticed a clause that deals with suspensive terms in the purchase contract. Typically, these conditions refer to deposits that must be paid, financing that must be obtained, and/or another property that must be sold before the sale can be confirmed. The interpretation seems quite simple – to meet the requirements, then the contract is valid; if they do not perform, the contract is not valid. But is it that simple? And what are the consequences of non-compliance? In the Netherlands, the parties have a great deal of contractual freedom. Thus, the parties can also contract under conditions (suspensive or dissolving). What does this mean and what should you pay attention to? It is important to note that to adequately protect both parties to the agreement, a delay is often linked to the condition precedent. This means that if the suspensive condition is not met within a certain period of time (e.g. B if the buyer`s current home is not sold within 30 days), the condition is considered unfulfilled and the contract is therefore void. Legally, a condition precedent can be described as a condition that suspends the performance or effect of one or some or all of the obligations arising from a contract until the condition is met. If the condition is not met, no contract is concluded. Once the condition is fulfilled, the contract and the mutual rights of the parties refer to the date of signature of the contract and not to the date of performance of the condition and are considered to be in force from the date of performance of the condition.

However, if the condition precedent is not met, no binding contract is concluded between the parties. Neither party performing the contract in accordance with the contract will remedy this rule. If the parties have agreed that one of them may terminate the agreement when the condition occurs, it is important that one of the parties declares and proves that a condition of resolution exists and is met. It is therefore appropriate to expressly complain that the condition occurred and that it occurred within the agreed time limit. If there are such conditions on which the sale of a property depends, it is important to expressly include them in writing in the offer to purchase so that they adequately affect the validity of the contract. This court agreed with the a quo court that the term “dismissal” refers to any act of an employer that leads directly or indirectly to the termination of an employment contract. Mampeule`s dismissal as a director was based on the exercise of shareholders` rights contained in section 220 of companies law 61 of 1973 (“Companies Act”). An offer to purchase is enforceable under South African law once signed by both parties to the agreement.

However, there are certain situations in which the contract may be declared null and void, and such a situation is when a condition precedent contained in the offer to purchase is not met. If the condition of dissolution has entered into force, the contractual partner who has already fulfilled it is obliged to reverse it – as far as possible. If this is not possible, it becomes a payment for the value of the services provided. However, this does not apply to long-term agreements. As a general rule of contract law, conditions precedent and dissolution are valid and enforceable. The relevant question is whether we can use these conditions in employment contracts, given that the validity and termination of these contracts are governed by special legislation. If a condition precedent is included in favour of a given Contracting Party, that condition precedent may be lifted at any time before the expiry of the period for the fulfilment of the condition precedent by the party for whose benefit the condition was accepted. Accordingly, taking into account the above scenarios, the Buyer may, at any time before the expiry of the period of the condition precedent, inform the Seller that it waives the condition precedent and that the contract is no longer subject. As a result, the contract becomes unconditional and the buyer and seller are bound by the terms of the contract.

The most common occurrence of conditions precedent is in contracts that involve the sale of real estate such as a house, apartment, land or farm. The conditions generally encountered in the purchase contract are that the sale depends on the buyer`s receipt of a deposit from a financial institution and/or that the sale depends on the buyer selling his existing property within a certain period of time. It is important to remember that, as a general rule, conditions precedent in favour of one of the contracting parties are included in a contract. In the above scenario, conditions precedent are included to protect the buyer. If the buyer is unable to obtain a deposit and/or sell his existing property within the required time, the contract will have no force or effect and the buyer is not bound by the terms of the contract. Failure to comply with a condition precedent invalidates the contract and if the parties nevertheless wish to continue the sale, a new purchase contract may have to be concluded. For both conditions, in certain circumstances, doing nothing may also lead to the conclusion that prevention or fulfillment of the condition has been achieved. Of course, if you don`t have a license because you didn`t apply for one, you can`t claim no license. In practice, this means that the party for whom the condition is included is required to do everything possible to ensure that the condition precedent is met or that the condition of dissolution does not take effect. A condition precedent is a condition that suspends rights and obligations (or the validity of the entire contract) until a specific future event occurs.

When the event occurs, the suspended part of the contract (or even the entire contract) comes to life. If the condition precedent is never met, the suspended rights and obligations will never occur and it will be as if the contract had never been concluded. In the example above, only R1,400,000 is approved before December 2, 2013, i.e. R100,000 less than the required amount, then the condition is not met and the contract expires. .