Conditional contracts
Conditional contracts

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Conditional contracts
  • Certainty
  • Fulfilment
  • Specific performance
  • Waiver—exclusive benefit
  • Late waiver/fulfilment
  • Termination

Contracts often provide for a condition or conditions to be satisfied before completion takes place (eg obtaining planning permission) or, in some cases, before the condition, or certain provisions in it, come into effect.

Certainty

If the condition is so vague or indefinite that the intention of the parties’ cannot be ascertained with reasonable certainty, the condition is void for uncertainty, as was the case with a special condition that a sale was subject to the buyer obtaining a satisfactory mortgage.Lee-Parker v Izzet (No 2) [1972] 2 All ER 800

Fulfilment

If the condition is in the hands of one party, the other party should ensure that the first party is obliged to use all reasonable endeavours to ensure that the condition is fulfilled. If the condition is in the hands of the buyer (eg a buyer who is making a planning application), the seller should also ensure that the buyer is obliged to procure that the condition is fulfilled as soon as possible, to avoid the seller’s interest in the land being sterilised for too long a period. The buyer may well have sound reasons for proceeding at a slower pace (eg where the local authority operates a pre-application consultation process).

Equally, if one party has the power to decide whether the condition has been fulfilled (eg whether a planning permission is satisfactory), then, in order to avoid disputes, the contract should contain as tight a definition as possible as to what constitutes satisfaction of the condition. If the contract is silent, it is implied that the party deciding whether the condition is fulfilled must act reasonably. For

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