Legal Definitions - negative condition

A negative condition in a legal context refers to a specific event or circumstance that, if it does not occur, allows a particular legal obligation, right, or contract provision to take effect, continue, or be terminated. Essentially, the absence of a specified event is what triggers or maintains a legal consequence.

• Example 1 (Lease Renewal):

  Imagine a commercial lease agreement for a retail store. The landlord agrees that the tenant can automatically renew their lease for another five years, unless the tenant has defaulted on rent payments more than twice in the preceding year. Here, the absence of more than two rent defaults is the negative condition that allows the lease renewal option to be exercised. If the tenant defaults three times, the condition is not met (because the negative event occurred), and they lose the right to renew.

• Example 2 (Business Acquisition):

  A large corporation enters into an agreement to acquire a smaller tech startup. A clause in their acquisition contract states that the deal will proceed as planned unless the startup's key intellectual property is subject to a new patent infringement lawsuit before the closing date. The absence of a new patent infringement lawsuit against the startup's core technology is the negative condition for the acquisition to finalize. If such a lawsuit arises, the condition is not met, and the acquiring corporation may have the right to withdraw from the deal.

• Example 3 (Software Licensing):

  A software company licenses its proprietary code to another business for integration into their product. The license agreement specifies that the licensee retains the right to use and modify the code for internal purposes unless they attempt to reverse-engineer the software or distribute it to unauthorized third parties. The absence of reverse-engineering or unauthorized distribution acts as the negative condition that keeps the license valid and active. If either of those prohibited actions occurs, the negative condition is violated, and the licensor could revoke the license.