Drakonic, not draconic, since it refers the ancient Greek king Drako (the c does not exist in Greek). That’s the effect if a condition remains unsatisfied: to smoothen it, a party may specify or address the non-fulfilment; or a party may need specific remedies for such case. This blog post is about the related best practice rule. It is also the last best practice rule in the series: click here for the post preceding today’s one.
12) Specify the effects of non-fulfilment of a condition.
If one or more of the conditions will not be satisfied, the disappointed party might want to claim pre-contractual liability of the other party. Also, several actions might have been taken in anticipation of the completion of the agreement or the satisfaction of the condition and such actions may have an irreversible aspect or may require efforts or costs to achieve reversal.
Typically, the non-fulfilment of a condition results in the right of either or both parties to terminate the agreement without any liability towards other parties involved in the transaction. For example:
If the Conditions are not satisfied or waived on or before the Back Stop Date, each Party may terminate this Agreement and the other Party shall not have any claim against the Party so terminating this Agreement as a result of such termination. Following termination, this Agreement shall cease to have effect, except for this Section and Articles [confidentiality, notices, costs, applicable law and dispute resolution], and except furthermore that such termination shall not affect any rights or liabilities of either Party in respect of any preceding breach of this Agreement.
Do not repeat the law. It is unnecessary to provide that the right to terminate cannot be invoked by a party who caused the non-fulfilment of a condition (whether this is the consequence of a party’s failure to make sufficient efforts to have a condition satisfied or to start making such efforts timely). This is because the law will not permit such termination right to be exercised.
