Legal Definitions - commissoria lex

The term commissoria lex refers to a specific clause within a contract that allows one party to automatically terminate the agreement, or gives them the right to terminate it, if the other party fails to fulfill a particular obligation, often related to payment, by a specified deadline. This clause typically results in the forfeiture of something already paid or delivered by the defaulting party.

Essentially, it's a condition that, if not met, triggers a predetermined consequence, usually the cancellation of the contract and the loss of any prior payments or rights.

Here are some examples to illustrate this concept:

• Real Estate Purchase Agreement: Imagine a buyer agrees to purchase a piece of land and pays an initial deposit. The contract includes a clause stating that if the buyer fails to complete the full payment by a specific closing date, the seller has the right to cancel the sale and keep the deposit. This clause acts as a commissoria lex because the buyer's failure to perform (pay the full amount) by the deadline allows the seller to terminate the agreement and retain the deposit as a forfeiture.

• Equipment Lease with Option to Buy: A small business leases specialized machinery with an option to purchase it after two years. The lease agreement specifies that if the business does not exercise the purchase option and secure financing by the end of the two-year term, the option automatically expires, and any non-refundable option fee paid will be forfeited. Here, the commissoria lex is the condition that the business must act by a certain date; failure to do so results in the automatic termination of their purchase right and the loss of their option fee.

• Installment Sale of Goods: Consider a contract for the purchase of a custom-made product, where the buyer agrees to pay in three installments. The contract includes a provision that if the buyer misses two consecutive payments, the seller can reclaim the product, and all previous payments made by the buyer will be forfeited. This clause functions as a commissoria lex because the buyer's failure to meet the payment schedule triggers the seller's right to repossess the goods and keep the money already paid, effectively canceling the sale due to non-performance.