Conditions precedent in commercial contracts

Copyright © 2025 LexisNexis
Published by a LexisNexis Commercial expert
Practice notes
In-house

Conditions precedent in commercial contracts

Copyright © 2025 LexisNexis

Published by a LexisNexis Commercial expert

Practice notes
In-house
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This Practice Note considers the meaning, interpretation and Use of Conditions precedent in commercial arrangements. It also considers typical conditions precedent and drafting issues.

What are conditions precedent?

A Condition precedent in a commercial Contract details an event which must take place before:

  1. •

    a contract, or

  2. •

    a party’s obligation(s) under a contract

comes into force. The contract, or the relevant obligation, does not become binding until the condition has been satisfied.

The leading case on the principles of interpretation in the context of a condition precedent has been identified as Bremmer Handelsgesellscheft Schaft mbH v Vanden Avenne Izegem PVBA [1978] 2 Lloyd’s Rep 109 (not reported by LexisNexis®) where Lord Wilberforce said:

‘Whether this clause is a condition precedent or a contractual term of some other character must depend on (i) the form of the clause itself, (ii) the relation of the clause to the contract as a whole, (iii) general considerations of law.’

The Court of Appeal has recognised that when determining whether a clause is a condition precedent, it is not always

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Jurisdiction(s):
United Kingdom
Key definition:
Condition definition
What does Condition mean?

A condition is a term of the contract that is so significant that it goes to the heart of the transaction—so it is a major term of the agreement.

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