Conditional Transfers: Conditions Precedent and Subsequent

(c) A transfers Rs. 500 to B on condition that she shall murder C. The transfer is void. Forbidden by law.

(d) A transfers Rs. 500 to his niece C if she will desert her husband. The transfer is void. Opposed to public policy.

The consequence under section 25 is that the interest fails, not merely the condition. That is the opposite of what happens under section 10, where the condition dies and the transfer lives. The difference is that here the interest is dependent upon the condition, so removing the condition would give the transferee something the transferor never offered.

Section 26: condition precedent, substantial compliance

A condition precedent is one to be fulfilled before a person can take an interest. Section 26 provides that such a condition is deemed to have been fulfilled if it has been substantially complied with.

The illustrations show exactly where the line falls:

(a) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D and E. E dies. B marries with the consent of C and D. B is deemed to have fulfilled the condition. The purpose of the condition, that the marriage should have the approval of those three, has been met as nearly as circumstances allow.

(b) A transfers Rs. 5,000 to B on the same condition. B marries without the consent of C, D and E, but obtains their consent after the marriage. B has not fulfilled the condition. Consent after the event is not consent to the marriage at all, so nothing of substance was complied with.

Put together, the two illustrations say that substantial compliance means meeting the substance of what was required, not doing something roughly similar afterwards.

Sections 27, 28 and 30: what happens to the other gifts

Section 27: an ulterior disposition on failure of the prior one. Where an interest is created in favour of one person, and by the same transaction an ulterior disposition of the same interest is made in favour of another to take effect if the prior disposition fails, the ulterior disposition takes effect on that failure although the failure may not have occurred in the manner the transferor contemplated.

An ulterior disposition is simply a later gift of the same interest, meant to operate if the first one does not.

But the second paragraph adds the exception: where the intention is that the ulterior disposition shall take effect only if the prior one fails in a particular manner, it does not take effect unless it fails in that manner.

The illustrations:

(a) A transfers Rs. 500 to B on condition that he shall execute a certain lease within three months after A's death, and if he should neglect to do so, to C. B dies in A's lifetime. The disposition in favour of C takes effect, even though B did not fail by neglecting; he failed by dying.

(b) A transfers property to his wife, but in case she should die in his lifetime, transfers to B what he had transferred to her. A and his wife perish together in circumstances making it impossible to prove she died first. The disposition in favour of B does not take effect, because the intention was that B should take only if the prior gift failed in that particular manner, and that manner cannot be proved.

Section 28: a condition superadded. An interest may be created to accrue to a person with a condition superadded that on a specified uncertain event happening, or not happening, the interest shall pass to another. Such dispositions are subject to sections 10, 12, 21, 22, 23, 24, 25 and 27. That list is a useful cross-check: the conditional-transfer rules do not float free of the rest of Module I.

Section 30: an invalid ulterior disposition does not destroy the prior one. If the ulterior disposition is not valid, the prior disposition is not affected by it.

Its illustration: A transfers a farm to B for her life, and, if she does not desert her husband, to C. B is entitled to the farm during her life as if no condition had been inserted. The condition attached to C's gift is opposed to public policy under section 25, so C takes nothing, and B keeps her life interest untouched.

Section 30 is the counterweight to section 16, and the pairing is worth an answer point. Under section 16 a subsequent interest falls with a prior one that failed under sections 13 or 14. Under section 30 a prior interest does not fall merely because the interest that was to follow it is invalid.

Sections 29, 31 and 32: conditions subsequent and determining conditions

Section 29: strict fulfilment. An ulterior disposition of the kind in section 28 cannot take effect unless the condition is strictly fulfilled.

Its illustration: A transfers Rs. 500 to B, to be paid on his attaining majority or marrying, with a proviso that if B dies a minor or marries without C's consent, the Rs. 500 shall go to D. B marries at seventeen without C's consent. The transfer to D takes effect, because the condition was strictly satisfied on its terms.

Section 31: a condition that the interest shall cease. Subject to section 12, an interest may be created with a condition superadded that it shall cease to exist if a specified uncertain event happens, or does not happen.

Its illustrations: A transfers a farm to B for life with a proviso that if B cuts down a certain wood the transfer shall cease; B cuts the wood and loses his life interest. And: A transfers a farm to B provided that if B does not go to England within three years his interest shall cease; B does not go, and his interest ceases.

Section 32: the condition must not be invalid. For a condition that an interest shall cease to be valid, the event to which it relates must be one which could legally constitute the condition of the creation of an interest. In other words, a condition cannot be used to take an interest away if it could not lawfully have been used to give it in the first place.

Sections 33 and 34: when the act must be done

Section 33: no time specified. Where an interest is created subject to a condition that the person taking it shall perform a certain act, and no time is specified, the condition is broken when he renders the performance impossible, permanently or for an indefinite period. So he is not in breach merely because he has not yet acted; he is in breach when he has put the act out of reach.

Section 34: time specified. Where an act is to be performed by a person either as a condition to be fulfilled before an interest is taken, or as a condition on the non-fulfilment of which the interest is to pass to another, and a time is specified, the act must be performed within that time.

A worked example

Ashwin, a widower, transfers a plot at Panvel to his nephew Bhaskar by deed, with three clauses.

Clause A: "to Bhaskar, if he obtains the consent of my three brothers to his marriage." A condition precedent: Bhaskar takes nothing until it is met. Suppose one brother has died and Bhaskar marries with the consent of the surviving two. Section 26 and illustration (a) apply: substantial compliance is enough, and Bhaskar is deemed to have fulfilled the condition. Had he married first and collected consents afterwards, illustration (b) would defeat him.

Clause B: "but if Bhaskar sells the plot within ten years, it shall go to my niece Charulata." A condition subsequent with an ulterior disposition. Section 29 requires it to be strictly fulfilled before Charulata can take. If Bhaskar mortgages the plot rather than selling it, the condition is not satisfied on its terms and Charulata takes nothing.

Clause C: "and if Bhaskar leaves the Hindu religion, his interest shall cease and the plot shall go to my friend Dinesh." Section 31 permits a condition that an interest shall cease, but section 32 requires the event to be one that could lawfully have been made the condition of creating an interest, and section 25 makes a condition void if the Court regards it as opposed to public policy. A condition penalising a change of religion is of that character, so the condition fails. By section 30, the invalidity of Dinesh's gift does not affect Bhaskar's prior interest, and Bhaskar holds the plot as if the clause had not been written.

What it does NOT mean

Section 25 does not merely strike out the condition. The interest fails, because it is dependent on the condition. Contrast section 10, where the transfer survives and the condition alone is void.

Substantial compliance is not near-enough compliance. Illustration (b) to section 26 shows that doing the thing at the wrong time is no compliance at all.

A condition subsequent is not tested loosely. Section 29 requires strict fulfilment, and the reason is that a forfeiture is at stake.

Failure "in a particular manner" is not the default. Section 27's rule is that an ulterior disposition takes effect however the prior one failed; the particular-manner requirement applies only where that was the intention.

Section 30 is not the same as section 16. Section 30 saves a prior interest when the later one is invalid. Section 16 destroys a later interest when the prior one failed under sections 13 or 14.

Impossibility is judged at the date of the transfer. Illustration (b) to section 25 turns on C being already dead when the transfer was made.

Distinctions

Quick revision

• Section 25: an interest dependent on a condition fails if the condition is impossible, forbidden by law, defeats any law, is fraudulent, injures another's person or property, or is immoral or against public policy. The interest fails, not just the condition.
• Section 26: a condition precedent needs only substantial compliance. Consent of two where the third has died is enough; consent obtained after the marriage is not.
• Section 29: a condition subsequent must be strictly fulfilled before the ulterior gift takes effect.
• Section 27: an ulterior disposition takes effect however the prior one failed, unless the intention was that it should fail in a particular manner.
• Section 28: such dispositions are subject to sections 10, 12, 21, 22, 23, 24, 25 and 27.
• Section 30: an invalid ulterior disposition does not affect the prior one. Contrast section 16.
• Section 31: an interest may be made to cease on a specified uncertain event, subject to section 12. Section 32: the event must be one that could lawfully have created an interest.
• Sections 33 and 34: no time specified, breach when performance is made impossible; time specified, perform within it.

Test yourself

1. Distinguish a condition precedent from a condition subsequent, and give the standard of compliance for each. A condition precedent must be fulfilled before the person can take the interest, and section 26 requires only substantial compliance. A condition subsequent operates after the interest has vested and defeats it, and section 29 requires strict fulfilment.

2. Why does the law demand strict compliance for one and only substantial compliance for the other? Because both leanings favour the person who holds or is to hold the property. A condition precedent stands between him and a gift, so the law is generous; a condition subsequent would take away what he already has, so the law is exacting.

3. A transfers Rs. 5,000 to B if he marries with the consent of C, D and E. B marries with the consent of C and D, E having died. Result? B is deemed to have fulfilled the condition. This is illustration (a) to section 26: substantial compliance suffices where the remainder is impossible.

4. A gives property to B on condition that B shall murder C. What happens? The interest fails under section 25, the condition being forbidden by law. Since the interest is dependent on the condition, B takes nothing.

5. A transfers a farm to B for life, and if she does not desert her husband, to C. What does B take? B is entitled to the farm during her life as if no condition had been inserted. The condition attached to C's gift is opposed to public policy, so it is void, and section 30 provides that the invalidity of the ulterior disposition does not affect the prior one.

6. A transfers Rs. 500 to B on condition that he executes a lease within three months of A's death, failing which to C. B dies during A's lifetime. Does C take? Yes. Section 27 provides that the ulterior disposition takes effect on the failure of the prior one although the failure did not occur in the manner contemplated.

7. When is a condition broken where no time is specified for performing the act? Under section 33, when the person renders the performance of the act impossible, permanently or for an indefinite period. Mere delay is not a breach.