Legal Definitions - dissolving condition

A dissolving condition (also known as a resolutory condition) is a specific future and uncertain event that, if it occurs, automatically terminates an existing legal agreement, obligation, or right. Until the condition is met, the agreement or obligation remains fully in effect. Once the dissolving condition is fulfilled, the legal relationship or obligation comes to an end.

• Example 1: Real Estate Purchase Agreement

  Imagine a contract for the sale of a house that includes a clause stating the agreement will automatically terminate if the buyer's current home does not sell within 90 days. The buyer and seller are bound by the contract during this period. However, if the 90 days pass and the buyer's home has not sold, the condition is met, and the purchase agreement for the new house automatically dissolves, releasing both parties from their obligations.

• Example 2: Business Partnership Agreement

  Two individuals form a business partnership, and their agreement specifies that the partnership will dissolve if either partner declares bankruptcy. The partnership operates normally until such an event. If one partner later files for bankruptcy, this acts as the dissolving condition, and the partnership agreement automatically terminates, requiring the partners to proceed with the winding up of the business.

• Example 3: Scholarship Grant

  A university awards a scholarship to a student, with the condition that the scholarship will be revoked if the student's GPA falls below a 3.0 in any given semester. The student receives the scholarship and benefits from it as long as their academic performance meets the standard. If, in a subsequent semester, the student's GPA drops to 2.8, this triggers the dissolving condition, and the scholarship is automatically terminated for future semesters.