Conditions subsequent

Definition

A condition subsequent (ontbindende voorwaarde) takes effect immediately but lapses automatically if a defined uncertain future event occurs. It is the mirror image of a condition precedent: the obligation exists from the start and ends on the trigger, rather than only beginning once the trigger is met. Under Dutch law the effect is in principle non-retroactive, so performance already rendered must be undone rather than treated as never owed.

Example

A purchase agreement is concluded subject to a condition subsequent: it dissolves automatically if the buyer's mortgage is refused.

Why this is a business risk

Conditions subsequent create real-time exposure: the contract is live and obligations run, but the whole arrangement can fall away at a future moment. If the unwind obligation (returning money or property when the condition triggers) is not clearly set out, the parties may disagree on what must be reversed and by when. Businesses that do not actively track whether the condition has triggered risk continuing to perform after the contract has legally dissolved.

How to manage it

• Define the triggering event precisely: ambiguity about whether the condition has occurred is a primary source of disputes.
• Set a longstop date after which the condition can no longer trigger, so the contract eventually becomes unconditional.
• Describe the unwind obligations clearly: who returns what, within what timeframe, and what interest or cost is owed.
• Monitor whether the triggering event has occurred and notify the other party promptly to avoid disputes about timing.

Legal references

• BW 6:22 Dutch Civil Code: conditional obligations Dutch law
• BW 6:24 Dutch Civil Code: effect of conditions, no retroactivity Dutch law

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.