Legal Definitions - resolutory condition

In legal terms, a "condition" refers to a future and uncertain event that affects the existence or termination of a legal obligation or right. A resolutory condition is a specific type of condition that, when fulfilled, automatically brings an existing agreement, obligation, or right to an end.

Unlike a "suspensive condition" which delays the start of an obligation until the condition is met, a resolutory condition means the agreement or obligation is already in effect. It continues to operate as normal until the specified future event occurs, at which point the agreement or obligation is terminated or dissolved.

Here are some examples to illustrate this concept:

• Commercial Lease Agreement:

  Imagine a small business signs a five-year lease for office space. The lease agreement includes a clause stating that if the landlord decides to sell the entire building to a new owner, the existing lease will automatically terminate six months after the sale is finalized. Until the building is sold, the lease is fully active, and the business has the right to occupy the space.

  How this illustrates the term: The sale of the building is the resolutory condition. The lease is active from day one. If the landlord sells the building, that condition is met, and the existing lease agreement (and the business's right to occupy the office) comes to an end after the specified notice period.

• Software Licensing Agreement:

  A technology company licenses a specialized software platform to a client for a monthly fee. The licensing agreement states that the license will remain valid as long as the client maintains its accreditation with a specific industry regulatory body. If the client's accreditation lapses or is revoked, the software license automatically terminates.

  How this illustrates the term: The software license is immediately granted and fully operational. The client's continued accreditation is the resolutory condition. If the client loses its accreditation, this condition is met, and their existing right to use the software is extinguished.

• Conditional Gift or Donation:

  A grandparent gifts a significant sum of money to their grandchild to help with university tuition, with the explicit written condition that if the grandchild drops out of university before completing their degree, any remaining funds must be returned to the grandparent. The grandchild immediately receives and can use the funds for tuition.

  How this illustrates the term: The act of dropping out of university before graduation is the resolutory condition. The gift is immediately effective, and the grandchild has access to the funds. However, if the grandchild meets the condition (drops out), their right to the remaining gifted funds terminates, and an obligation to return them arises.