Purchase and sale contracts are usually written in Real Estate using ‘subject to’ clauses., that is, conditions that must take place before the purchase is finalized. Preceding conditions are the opposite of postconditions, which are conditions that must continue to exist in order for something else to continue. Since the contract is the instrument that expresses the common intention of the parties to be legally bound by their respective obligations, it is a requirement that the contracts be written in clear and unequivocal terms. If the parties have not expressed those obligations clearly enough, there is no contract because the necessary common intention to be bound by certain obligations does not yet exist. It is a legal requirement, therefore, that all the terms and conditions of the contract are sufficiently clear, since the law does not impose arrangements whose essential terms or conditions are uncertain.

The ideal ‘subject to’ clause is one whose criteria are so clear that it is completely obvious whether the criteria for satisfying that clause are met. In determining the truth of a ‘subject to’ clause, courts often consider whether the criteria for satisfying such a ‘subject to’ clause are subjective Prayed objective. A subjective criterion is one that depends on the personal vision of the individual who decides it. On the other hand, an objective criterion is one that depends on an external event. Therefore, the more subjective the wording of a ‘subject to’ clause, the more likely it is that a court will find the clause uncertain. To be absolutely technical, furthermore, in addition to being subjective and objective, courts have recognized that conditions precedent can also be partly subjective and partly objective, and that different results occur depending on the circumstances.

Each ‘precondition’ case must be considered on its own facts. Some conditions precedent are so imprecise or so completely dependent on the Buyer’s subjective state of mind, that the contracting process must still be considered at the offer stage. An example of a ‘subject to’ clause would be: “This Agreement is subject to the approval of Buyer’s parents.” This means that if a condition precedent is entirely subjective (sometimes referred to as a ‘whim and fancy’ clause), courts may treat the legal settlement as nothing more than an offer from Seller that Buyer can accept by removing the ‘subject to’ clause. clause.In other words, even though there was an initial offer followed by an acceptance, and even though the instrument is called a Sales Contract, the agreement of right is nothing more than an offer until the ‘subject to’ clause is removed (by Buyer). .

On the contrary, when the suspensive condition is clear, precise and objective, the contract is consummated. Neither party may withdraw, but enforcement is held in abeyance until the parties know whether the objective condition suspensive is met. An example would be “Subject to Buyer obtaining satisfactory financing” by a certain date. If a ‘subject to’ clause is objective, a contract takes effect as soon as the offer is accepted. The obligation to perform the contract until its termination is suspended until the previous condition is removed.

But, as said before, there is a third class of precedent conditions. Into this class fall the types of conditions that are partly subjective and partly objective. An example would be: “Subject to Planning Department approval of the attached subdivision plan.” This clause seems objective but, in fact, it differs from a truly objective condition precedent in that someone has to apply for approval from the Planning Department. Some persuasion from the Planning Department may be required. Can the Buyer prevent the condition from being met by either refusing to submit or by persuading the Planning Department not to approve the subdivision plan? Clearly, Buyer must take two steps to fulfill Buyer’s obligation in this regard: the first step is to submit the subdivision plan to the Planning Department, and the second is to do its best to ensure that the Planning Department receives it. approve.

The law in relation to implied terms in a contract is no different in relation to conditions precedent than it is for other contract terms. Contracts must not be allowed to fail because of an omission that the parties would have corrected immediately if they had noticed the omission at the time the contract was entered into. Courts have at their disposal the ‘efficiency test’ and the ‘informal bystander test’ to guide them in evaluating contracts. In the example above, the effectiveness test would require someone to submit the subdivision plan to the Planning Department, and the bystander test would be met if both parties answered the hypothetical question of who will submit the plan, obviously the Buyer. In essence, when a condition precedent is partly subjective and partly objective, the court must determine whether its characteristics are objective enough to constitute a contract. If, on the other hand, the clause is predominantly subjective, then the agreement will amount to nothing more than an offer, which the Buyer can accept by removing the ‘subject to’ clause.