You are on page 1of 10

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

COLLEGE OF LEGAL STUDIES


B.A., LL.B. (HONS.)
SEMESTER V
ACADEMIC YEAR: 2015 -16

SESSION: JULY-DECEMBER

PROJECT ON
CONDITIONAL TRANSFER
Under the Supervision of Prof. Shikha Dimri
(TO BE FILLED BY THE STUDENT)

NAME:

PRASHANT SINGH
SAP NO:
ROLL NO:

500028509
R450213080

Acknowledgement:I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and this organization. I would like to extend my sincere
thanks to all of them. I am highly indebted to Prof. Shikha Dimri for her guidance and constant
supervision as well as for providing necessary information regarding the project & also for her
support in completing my project Conditional Transfer.
My thanks and appreciations also go to my classmates in developing the project and people who
have willingly helped me out with their abilities.
I am also thankful to the IT Department of UPES and the library as well as without them the
making of this project would have been next to impossible.
I am thankful to and fortunate enough to get constant encouragement, support and guidance
from my parents and friends who helped me in successfully completing this project.

Table of contents
1.)
2.)
3.)
4.)

Introduction
Conditional Obligations under Civil Law (Analysis)
Condition Subsequent & Condition Precedent
Conclusion

Introduction

Property may be transferred by one person to another absolutely or conditionally.


In absolute transfers, interest in property is immediately vested in the transferee
because nothing is to be performed by his side. Whereas in a conditional transfer,
as the name suggests, certain conditions are attached which are to be fulfilled for
the transfer and vesting of interest in the transferee.
These conditions may be of three types:
I)

Conditions Precedent
A condition which is prior to the transfer is known as condition
precedent. Where the terms of a transfer of property impose a condition
to be fulfilled before a person has taken an interest in the property, the
condition is known as Condition Precedent.

II)

Conditions Subsequent
The condition which is to be fulfilled after the transfer of property has
already taken place is known as Condition Subsequent. Where a transfer
of property is subject to a condition subsequent the interest which has
already been vested in the transferee is affected by the fulfillment or nonfulfillment of that condition.

III)

Conditions Collateral
The condition which is to be fulfilled simultaneously with the transfer is
known as Collateral Condition. Such a condition is to be performed side
by side the operation of transfer.

According to section 25, an interest created on a transfer of property and


dependent upon a condition fails under the following conditions:
i)

If the fulfillment of the condition is impossible


Where the condition to be performed is impossible of performance i.e.,
the condition is such that it cant be performed, the transfer of property
too cant take place. For example, A lets a farm to B on condition that he
shall walk a hundred miles in an hour. The lease is void. Since this
condition is impossible to perform because no person can walk hundred
miles in an hour. Similarly, A gives Rs.500 to B on the conditions that he

ii)

iii)

iv)

v)

vi)

shall marry As daughter C. At the date of transfer C was dead. The


transfer became void because due to Cs death the condition became
impossible of performance.
Is forbidden by law, or
If the condition is forbidden by law the transfer on the basis of fulfillment
of that condition becomes void. For example, A transfers his land to B on
the condition that B will give his license to A (B has certain liquor license
which is given by the government under certain restrictions). Such a
transfer is void.
Is of such nature that, if permitted, it would defeat the provisions of any
law, or
For example: A transfers property to B on the condition that B will marry
As daughter. B at that time was already married. Now if this condition is
performed the provisions of Hindu Law will be defeated because B, a
Hindu cant marry twice when the first wife is living and there is no
divorce.
Is fraudulent, or
Where the condition is fraudulent, the transfer will become void. For
example: A makes a gift of his house to B, who is agent of C, on
condition that B shall give a false receipt on behalf of his principal C.
Performance of this condition would be fraudulent, therefore, the transfer
is void.
Involves or implies injury to the person or property of another, or
For example: A transfers Rs.500 to B on the condition that he shall
murder C. The transfer is void because the condition involves injury to
another person.
Court regards it immoral or opposed to public policy
Where the condition is such that the court regards it immoral or against
public policy, the transfer depending upon such a condition will be void.
For example: Where A transfers Rs.500 to his niece C if she will desert
her husband, the transfer is void.

Conditional Obligations under Civil


Law (Analysis)

An obligation is conditional where it is made to depend upon a future and


uncertain event, either by suspending it until the event occurs or is certain not to
occur, or by making its extinction dependent on whether or not the event occurs.
Thus, a condition must be future and uncertain, and what is more, it cannot be
purely potestative , which means it cannot be solely dependent on the debtors will.
A condition must also be an external event that is not essential to the formation of
the contract. For example, a buyer who agrees to pay the price if the seller agrees
to deliver the item is contracting a pure and simple obligation. When an obligation
is subject to a suspensive condition, the creation of the obligation will depend on
the occurrence of an event or on the certainty that the event will not occur; thus,
the condition delays the creation of a relationship between the parties. As long as
the condition has not occurred, the very existence of the obligation is in abeyance.
The obligation is not only inexigible, as with a term; in fact it does not exist, as it
has not yet come into being. If the obligation in question is payment, the debt has
not legally arisen and a person who has paid in error can claim the money back.
Thus, the seller has no right to the price until the condition is fulfilled. Ownership
of property sold subject to a suspensive condition is not transferred immediately.
The seller retains ownership and all the incidents thereof. Occasionally, possession
of the property may be transferred when the contract is formed, for example in a
trial sale (which is presumed to be subject to a suspensive condition) but this does
not have the effect of transferring ownership. When the condition is fulfilled, it has
a retroactive effect to the date of conclusion of the contract, both between the
parties and against third parties: The fulfillment of a condition has a retroactive
effect, between the parties and with respect to third persons, to the day on which
the debtor obligated himself conditionally. Thus, with a suspensive condition, the
occurrence of the event causes the agreement to have become pure and simple
from the beginning: From what point does the obligation exist as a pure and simple
obligation, however? The answer might seem clear: until such time as the
suspensive condition occurs, the obligation is a conditional one; but from the
moment the suspensive condition occurs, a pure and simple obligation is
substituted therefore. Everything happens as though the obligation had been pure
and simple from the date the contract was formed; it is deemed never to have been
merely a potential obligation. Thus, when the contract provides for the transfer of
the right of ownership, that right is deemed to have passed to the buyer on the date
the contract was signed. The effects and consequences of retroactivity will be

analyzed below. Where the condition is not fulfilled within the allotted time or
when it becomes certain that it will not be fulfilled, the contract is, for all intents
and purposes, considered never to have been formed.

Condition Subsequent and


Precedent

Condition Subsequent
A condition subsequent is an event or state of affairs that brings an end to
something else. A condition subsequent is often used in a legal context as a marker
bringing an end to one's legal rights or duties. A condition subsequent may be
either an event or a state of affairs that must either:
(1) occur or
(2) fail to continue to occur.
Example: A right in land may be cut off by a condition subsequent. When land
rights are subject to a condition subsequent, this creates a defeasable fee called a
Fee simple subject to condition subsequent. In such a fee, the future interest is
called a "right of reentry" or "right of entry." There, the fee simple subject to
condition subsequent does not end automatically upon the happening of the
condition, but if the specified future event occurs, the grantor has a right to retake
his property (as opposed to it reverting to him automatically). Again, the right of
entry is not automatic, but rather must be exercised to terminate the fee simple
subject to condition subsequent. To exercise right of entry, the holder must take
substantial steps to recover possession and title, for example, by filing a lawsuit.
One of the languages used to create a fee simple subject to condition subsequent
and a right of entry is "to A, but if A sells alcohol on the land, then grantor has the
right of reentry."
Condition Precedent
A condition precedent is an event or state of affairs that is required before
something else will occur. In contract law, a condition precedent is an event which
must occur, unless its non-occurrence is excused, before performance under a
contract becomes due, i.e., before any contractual duty exists. For instance, in the
sentence "Jack will only go to heaven after he has died," the death of Jack is a
condition precedent to Jack going to heaven (although it is also possible in this
example for the occurrence of other conditions precedent to be needed before Jack
goes to heaven: it is not stated that Jack will necessarily go to heaven if he dies).
In estate and trust law, it is a provision in a will or trust that prevents the vesting of
a gift or bequest until something occurs or fails to occur, e.g. the attainment of a

certain age or the predecease of another person. For comparison, a condition


subsequent brings a duty to an end whereas a condition precedent initiates a duty.

Conclusion
The word condition may have a number of meanings. For instance, in some
jurisdictions, condition means a major term of the contract. That is not the sense in
which the term condition is used in this section. The conditional transfers are
generally based on the notion that the condition imposed is form of a consideration
which has to be fulfilled by the party. A condition which is prior to the transfer is
known as condition precedent. Where the terms of a transfer of property impose a
condition to be fulfilled before a person has taken an interest in the property, the
condition is known as Condition Precedent. The condition which is to be fulfilled
after the transfer of property has already taken place is known as Condition
Subsequent. Where a transfer of property is subject to a condition subsequent the
interest which has already been vested in the transferee is affected by the
fulfillment or non- fulfillment of that condition. The condition which is to be
fulfilled simultaneously with the transfer is known as Collateral Condition. These
conditions comprise an important part of the transfer which takes place and
sometimes, rather all the time these conditions when reasonable and legally sound
have to be fulfilled.