Definition of Condition Subsequent
A Condition Subsequent is a provision within a contract that specifies an event or action whose occurrence will terminate one or more obligations or rights under the agreement. This contrasts with a condition precedent, which is something that must happen before obligations in the contract arise. When the condition subsequent occurs, the contractual obligations are extinguished, releasing the parties from further performance.
Examples
Lease Agreements:
- A tenant might have a condition subsequent in their lease that permits lease termination if the zoning changes to a category that no longer allows for the current business operations.
Employment Contracts:
- An employment contract might stipulate that the contract will terminate immediately if the employee loses their professional certification.
Service Contracts:
- A software vendor contract could include a condition subsequent that ends the support services if the client fails to maintain a required operational environment.
Frequently Asked Questions (FAQs)
Q1: How is a condition subsequent different from a condition precedent?
- A1: A condition subsequent terminates obligations under a contract when an event happens, whereas a condition precedent involves an event that must occur to initiate obligations under the contract.
Q2: Are conditions subsequent common in commercial contracts?
- A2: Yes, conditions subsequent are commonly included in various types of commercial contracts as mechanisms to automatically terminate obligations under specific circumstances.
Q3: Can conditions subsequent be negotiated between parties?
- A3: Absolutely. Like other contract terms, conditions subsequent can be negotiated to reflect the interests and risk tolerance of the parties involved.
Related Terms
- Condition Precedent: An event that must occur before a duty becomes active in a contract.
- Breach of Contract: Occurs when one party fails to fulfill their obligations under a contract without lawful excuses.
- Contract Termination: The legal end of a contract, concluding the duties and obligations.
- Waiver: A voluntary relinquishment of a known right, claim, or privilege.
Online Resources
Suggested Books for Further Studies
- Contract Law: Principles and Objectivity by Brian A. Blum and Amy C. Bushaw
- The Law of Contract by Richard Stone and James Devenney
- Anson’s Law of Contract by Jack Beatson, Andrew Burrows, and John Cartwright
Fundamentals of Condition Subsequent: Business Law Basics Quiz
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