(1) If fulfilment of a condition is prevented by a party, contrary to the duty of good faith and fair dealing or the duty of co-operation, that party may not rely on the non-fulfilment of the condition. 

 

(2) If fulfilment of a condition is brought about by a party, contrary to the duty of good faith and fair dealing or the duty of co-operation, that party may not rely on the fulfilment of the condition. 

 

COMMENT

 

This Article on interference with conditions is a specific application of the general rules on good faith and fair dealing (see Article 1.7), inconsistent behaviour (see Article 1.8) and co-operation between the parties (see Article 5.1.3).

 

Under this Article, the party is not under an obligation to use all reasonable efforts to bring about the fulfilment of the condition. This Article merely states that the party who, contrary to the duties of good faith and fair dealing or co-operation, prevents the condition from being fulfilled may not rely on the non-fulfilment of the condition. If, on the contrary, the party brings about the fulfilment of a condition contrary to the duties of good faith and fair dealing or co-operation, that party may not rely on the fulfilment of the condition.

 

Whether or not a party is under an obligation to use all reasonable efforts to bring about the fulfilment of a condition is a matter of interpretation. In commercial practice, the parties themselves may expressly provide for the observance of the principle of good faith as regards all the events upon which completion of the transaction is conditional or go beyond this minimum standard and impose a duty to use “their best efforts to bring about the fulfilment of the conditions as soon as practicable”. These clauses may also be imposed on one party only (see Article 5.1.4).

 

The available remedies (right to performance or damages) are to be determined in accordance with the contractual provisions and the general rules on these remedies, as well as with the particular circumstances of the case.

 

Four factual situations can be distinguished to illustrate the operation of this Article.

 

(a) Where the fulfilment of a suspensive condition is prevented by a party contrary to the duty of good faith and fair dealing or the duty of cooperation, that party may not rely on the non-fulfilment of the condition.

 

Illustration

 

1. The licensing of software by B to A is agreed by the parties to be dependent upon the professional approval of the software by an independent computer engineer, C, who is nominated by B. B regrets the bargain and bribes C not to approve the software. Because of the bribe, C states that it does not approve the software. B is not allowed to rely on the non-fulfilment of the condition, i.e. B cannot refuse to perform the obligation under the contract when asked by A to do so.

 

(b) Where the fulfilment of a resolutive condition is prevented by a party contrary to the duty of good faith and fair dealing or the duty of cooperation, that party may not rely on the non-fulfilment of the condition.

 

Illustration

 

2. A hires earth-moving equipment from B for the time necessary for A to purchase its own equipment. As a commercial favour to A, the rate of hire is below the market rate. B’s obligation to make the earth-moving equipment available is subject to the resolutive condition that it comes to an end if A acquires its own earth-moving equipment. A turns down very attractive offers in order to continue benefiting from the favourable rate of hire. A may not rely on the non-fulfilment of the condition.

 

(c) Where the fulfilment of a suspensive condition is brought about by a party contrary to the duty of good faith and fair dealing or the duty of cooperation, that party may not rely on the fulfilment of the condition.

 

Illustration

 

3. The facts are the same as in Illustration 1, except that B bribes C to give its approval of the software despite C’s professional misgivings about the software. B is not allowed to rely on the fulfilment of the condition, i.e. B cannot ask A to perform the contract.

 

(d) Where the fulfilment of a resolutive condition is brought about by a party contrary to the duty of good faith and fair dealing or the duty of cooperation, that party may not rely on the fulfilment of the condition.

 

Illustration

 

4. A appoints B as its agent for the promotion and sale of A’s products. The agreement is to come to an end if the gross amount of sales made by B fails to reach EUR 1,000,000 by 31 December the second year. A, who has found another party willing to act as agent on terms more favourable to A than B, withholds supplies to B with the result that by the above date B’s gross sales fall well short of EUR 1,000,000. A may not rely on this to treat the agreement with B as having come to an end.