The Condition Suspensive in French Contracts: What Articles 1304 and Following Organise

The condition suspensive in French contracts: what Articles 1304 and following organise

French deals of any size are routinely signed subject to a condition suspensive (condition precedent): the obtaining of a loan, of a building permit, of an administrative authorisation, the completion of a merger or of a satisfactory trial. Under Article 1304 of the Civil Code the obligation is conditional when it depends on a future and uncertain event; the condition is suspensive where its accomplishment renders the obligation pure and simple, and resolutory (condition résolutoire) where its accomplishment extinguishes the obligation. Between signature and outcome the contract exists but cannot be enforced, and the code assigns a precise rule to every question the wait raises.

This article follows the life of the condition in order: what qualifies as a condition and what does not, the validity requirements of Articles 1304-1 and 1304-2, the rights of each party while the condition is pending, fulfilment and failure, including the rule of Article 1304-3 that deems the condition fulfilled against the party who prevented it, waiver under Article 1304-4, and the effects of Article 1304-6, formation without retroactivity on fulfilment and the lapse of the obligation on failure, with the restitutions that follow.

Where does your conditional deal stand?

What counts as a condition suspensive, and what does not

The event chosen must be future and uncertain, and its accomplishment must render the obligation pure and simple (C. civ. Art. 1304). An event whose occurrence is foreseeable is not uncertain (CA Caen, 25 avr. 1958), and the courts distinguish the condition from the terme (time limit): a time limit postpones an obligation that is certain to become due, where a condition suspends an obligation that may never become due at all. The distinction matters because the two regimes differ on every point, from prescription to restitution.

The existence of the condition should be affirmed in clear terms, because in case of dispute the trial judges appraise sovereignly whether the parties intended one (Cass. com., 29 juin 1981). The case law shows how widely the mechanism is used. A suspensive condition has been recognised where the engagement was subordinated to the conclusions to be drawn from a trial (Cass. com., 6 oct. 1964); where a purchase order for equipment was accompanied, the same day, by a pro forma invoice drawn up by the seller to obtain a credit covering the whole price (Cass. com., 10 mars 1980); where a leasing contract provided that the order of the machine was cancelled, and the lessor released, failing transmission of the delivery report signed by seller and lessee (Cass. com., 10 déc. 1996); where a promise to buy shares ran for sixty-three months from the definitive completion of a merger or capital increase to occur before a fixed date (Cass. 1e civ., 13 juill. 2004); and where a lease-termination indemnity promised by the landlord was payable only if the preliminary sale agreement over the premises was exercised by its beneficiary (Cass. com., 20 mars 2007).

The reverse line is just as instructive. There is no suspensive condition in the obligation to pay the price after the completion of an event that must occur by a fixed date at the latest, such as the completion of a golf course ready for operation (Cass. 3e civ., 7 janv. 2016, n° 14-26.945); in the postponement of the fixing of payment modalities (Cass. req., 20 janv. 1941); in a first engagement faithfully performed, where only the second engagement of the same agreement was to be specified in an annexed agreement (Cass. com., 20 déc. 1971, n° 69-11.784); in the buyer of a medical practice failing to obtain registration with the professional order (Cass. civ., 16 nov. 1976); in an assignee's undertaking to commission an audit of client accounts in consideration of the assignor waiving the balance of the price (Cass. com., 10 sept. 2013, n° 12-19.811); nor in the prior administrative approval of the transfer of an authorisation, where one party had declared that nothing opposed the planned transfer and the other had given notice of its irrevocable undertaking to acquire (Cass. com., 10 mars 2015, n° 13-10.002).

The resolutory condition is the mirror image: the contract takes effect at once and is undone if the event occurs. An emphyteutic lease, a long building lease, concluded under the resolutory condition of failure to obtain a building permit was resolved when the permit was refused; the lessee still owed damages for having applied for a permit for a construction that the configuration of the land did not allow (Cass. civ., 12 nov. 1975, n° 74-12.292). The rest of this article concentrates on the suspensive condition, the standard tool of French deal-making.

Valid conditions: possible, licit, and not dependent on the debtor's will alone

The condition must be licit. Article 1304-1 of the Civil Code requires the condition to be licit on pain of nullity of the obligation it affects, licitness including conformity with public policy. A loan clause prohibiting the borrower from letting the financed property was held illicit because it infringed the principle, stated at Article 544 of the Civil Code, of disposing of one's property in the most absolute manner (Cass. 1e civ., 13 déc. 2005).

The condition must be possible. An impossible condition sanctions itself: since it is certain from the outset that the event will not occur, the contract is stillborn for want of consent (Cass. 1e civ., 28 sept. 2016, n° 15-18.148). So held for the obtaining of an estate agent's professional card that could not be granted (CA Grenoble, 5 janv. 1990), for an acquisition that could not be carried out, the nullity being relative (Cass. 3e civ., 8 oct. 2008, n° 07-14.396), and for the release of an attachment over property, an attached asset being unavailable (CA Aix, 6 déc. 2012, n° 2012/736).

The condition must not be purely potestative. An obligation contracted under a condition whose realisation depends on the sole will of the debtor is void (C. civ. Art. 1304-2). The courts call this the purely potestative condition, and the decided examples are all variations on a debtor who keeps its engagement in its own hands: the debtor who can bring the contract into force by notifying its decision to the other party (Cass. civ., 13 nov. 1980); who owes 70 per cent of the price of purchased land only if it resells (Cass. civ., 8 oct. 1980, n° 79-11.992); who undertakes to lease or to buy without any price being fixed, or reserving the right to fix the price and the time of payment as it pleases (Cass. com., 22 févr. 1967; Cass. 3e civ., 1 févr. 1984, n° 82-16.266); who promises a building while reserving the right to decide when it will be able to build (CA Angers, 12 mai 1980) or which modifications it thinks fit to make (Cass. civ., 5 juill. 2000).

The prohibition concerns the debtor alone. A condition depending on the will of the creditor of the obligation is valid (Cass. com., 16 oct. 1978), but the same person cannot be both debtor and creditor: shareholders who through deceit made themselves majority holders of a company's capital in order to be free to call or not to call the contributions owed by some of them contracted under a purely potestative condition (Cass. civ., 18 juin 1974). Nor is a clause potestative where it affects only the duration of the contract and not the existence of the obligation, such as a right given to one party to end the contract without consideration (Cass. com., 31 mars 2021), or a right whose exercise is subordinated to just cause (Cass. com., 22 sept. 2021, n° 19-23.958).

The condition is valid, in contrast, where its realisation depends only in part on the debtor's will, what the courts call a simply potestative condition. That is the case where a third party must also act: an engagement subordinated not to the debtor's decision to sell but to the actual sale of one of its assets, which requires a buyer (Cass. com., 17 mai 1965); the obtaining of a bank loan (Cass. com., 22 nov. 1976); a company's clear warning that conclusion depends on the authorisation of its competent corporate organs (CA Versailles, 15 févr. 1990); a service provider's remuneration subordinated to its counterpart collecting the sums owed by its own clients (Cass. com., 15 oct. 2025, n° 24-10.272); an intermediary's commission payable on completion of the acquisition, which also depends on the seller (CA Versailles, 23 févr. 2001). The same holds where external factors intervene, such as economic fluctuations (Cass. civ., 7 oct. 1987).

The sanction is measured. Articles 1304-1 and 1304-2 pronounce the nullity of the obligation, not of the contract; the courts should nevertheless remain able to annul the whole contract where the impossible, illicit or potestative condition was the impelling and determining reason of the parties' consent, as they did under the code of 1804. Two limits complete the regime: the nullity can no longer be invoked once the obligation has been performed in full knowledge (C. civ. Art. 1304-2), and the nullity of the potestative obligation is not part of French international public policy, so it does not block the enforcement in France of an arbitral award founded on such an obligation (Cass. 1e civ., 7 déc. 2022, n° 21-17.492).

While the condition is pending: bound, but not yet enforceable

As long as the condition is not realised, the contract is formed but not enforceable, the obligation not being pure and simple. The engagement under condition is emphatically not a mere proposal to enter negotiations: the debtor cannot release itself from its promise while the failure of the condition is not established (Cass. 3e civ., 2 févr. 1983, n° 81-12.036; Cass. civ., 11 avr. 1995), and it cannot impede the proper performance of the obligation, on pain of the deemed-fulfilment rule examined below.

The debtor may, however, begin to perform before the condition is realised, provided the contract does not prohibit early performance: a project owner who terminated a construction contract after the condition was fulfilled was ordered to pay the builder for works already carried out (Cass. 3e civ., 19 févr. 1976, n° 74-12.154). Article 1304-5, paragraph 2 of the Civil Code confirms the possibility by providing that what has been paid can be recovered as long as the suspensive condition is not accomplished; a deposit or advance paid pending the condition is therefore recoverable. Recovering a service performed in kind is harder, but not excluded, since payment is the performance of the obligation due whatever its nature; where restitution in kind is impossible the provider can claim the equivalent, unless it is shown to have acted at its own risk. The prudent course, for the party expecting performance before the outcome, is either to prohibit any early performance or to organise in the contract the terms of restitution. Pending the condition, the risks of the thing to be delivered remain on the debtor, under the principle res perit debitori, the thing perishes at the debtor's expense, since ownership has not yet passed.

The creditor's position is symmetrical. It cannot demand the transfer of ownership of the thing sold (Cass. civ., 2 avr. 1979), and the assignor of a patent could not obtain the resolution of the assignment for non-payment of a price whose payment the parties had subordinated to the assignee achieving a positive pre-tax result, that condition being unfulfilled (Cass. com., 14 févr. 2018, n° 15-24.146). But the creditor of a conditional obligation is not without rights. It may take conservatory measures over the conditional claim (C. civ. Art. 1304-5, para. 1), such as declaring the claim in the debtor's insolvency proceedings or registering a provisional mortgage; attack acts of the debtor made in fraud of its rights (same text); assign the conditional claim (Cass. 3e civ., 20 juin 1973, n° 72-12.719); and rely on the suspension of prescription until the condition occurs (C. civ. Art. 2233; Cass. 3e civ., 12 janv. 1988). What it cannot do is perform acts of administration over the asset, such as concluding a lease or receiving a payment, all the more since the realisation of the condition no longer has retroactive effect by default, so those acts can no longer be validated after the event.

Finally, either party may invoke a cancellation clause contained in the contract while the condition is pending; the fate of the condition is then appraised at the date of the cancellation (Cass. 3e civ., 14 sept. 2023, n° 22-18.642).

Fulfilment, failure, deadlines, and the deemed-fulfilment rule of Article 1304-3

Whether the event occurred is read against the stipulations. The occurrence or non-occurrence of the event is determined by what the parties wrote. A condition of concluding a contract is not satisfied by an accord de principe (agreement in principle) (Cass. 1e civ., 7 nov. 2007, n° 06-17.413), nor a condition of concluding a new contract by a proposal to renew the current one (Cass. com., 22 nov. 2017, n° 16-21.401). A condition of obtaining an administrative authorisation was never realised where the authorisation was annulled (Cass. civ., 24 mai 2000). A condition consisting in the commercialisation of a product is realised once commercialisation took place, whatever its financial results (CA Paris, 4 janv. 2005, n° 04/05225). A condition subordinating a share transfer to the delivery by the transferor of a certificate that no default of the company existed was held realised by the mere delivery of the certificate, even though it did not match the company's real situation, no clause allowing the buyer to contest it (CA Paris, 4 oct. 2022, n° 20/12582). And the party who must set the machinery in motion must do so: where the promise required the seller to send a registered letter to start the period in which the buyer had to justify its loan applications, the seller who never sent the letter could not invoke the buyer's failure to realise the condition (Cass. 3e civ., 23 juin 2010, n° 09-15.999).

Conditions with a fixed deadline. Where the parties fixed the period within which the event had to occur, the period is strict: the judges cannot set aside the failure once the deadline has passed (Cass. com., 11 févr. 1980, n° 77-15.277; Cass. 3e civ., 11 mai 2011, n° 10-14.536). Under a clause giving six months for the obtaining of a building permit and treating the agreements as void within eight days of a registered letter, the condition was held to have failed at the expiry of the six months, the letter serving only to fix the definitive date of the effect of non-realisation, not to prolong the period (Cass. civ., 14 nov. 1978). Even without an express clause of automatic failure, the judge may deduce from the circumstances that the conditions have failed (Cass. 3e civ., 6 juin 2024, n° 23-11.680). The drafting recommendation drawn from this line is to state expressly that the condition fails if the period expires without the event.

Conditions without a deadline. Where no period was fixed, the parties are advised to provide that the condition is deemed to have failed once it is certain the event will not occur; failing that, the judges appraise, with appropriate reasons, whether the common intention was to allow a reasonable period only (Cass. 3e civ., 26 févr. 2013, n° 12-14.074). Courts have refused to let a condition run more than nine years after signature (CA Orléans, 27 oct. 2005), more than six years (Cass. 3e civ., 3 févr. 1982), more than three (Cass. 1e civ., 9 janv. 1963), even more than two (Cass. civ., 3 mai 1978), and where the price carried no indexation the intention to allow only a reasonable period was inferred (Cass. 3e civ., 26 févr. 2013). An obligation under suspensive condition cannot be perpetual, indefinitely prolonging the wait (Cass. 3e civ., 20 mai 2015, n° 14-11.851), yet a party cannot end the contract unilaterally as long as the condition has not failed (Cass. com., 6 mars 2007; Cass. 3e civ., 14 sept. 2023, n° 22-18.642): the way out runs through the judge, who will set a reasonable period.

Article 1304-3: the condition is deemed accomplished if the party who had an interest in its failure prevented it. This is where conditional deals are most often won and lost. The deemed fulfilment operates once the creditor proves that the steps the contract required for realisation were not carried out (Cass. 3e civ., 17 mars 2010, n° 09-13.158). The courts have applied it to the debtor of an obligation requiring authorisation who does not do everything in its power to obtain it (Cass. com., 7 mars 1972, n° 70-13.454); and, in the dense case law on the loan condition, to the buyer who renounced the contract the very day of signature without giving a reason (CA Aix, 22 nov. 1978), who claimed to have met a refusal although a loan was granted a few weeks later (Cass. com., 25 oct. 1983), whose applications were insufficient (Cass. com., 23 nov. 1993), who refused two loan proposals without valid reason (Cass. com., 31 janv. 1989), who applied for a loan not conforming to the agreed characteristics (Cass. 3e civ., 24 sept. 2014, n° 13-18.698; Cass. 3e civ., 16 janv. 2013, n° 11-26.557), or who bought in a personal capacity yet applied in the name of a property holding company (société civile immobilière) under formation without exercising the substitution right in the deed (Cass. 3e civ., 27 févr. 2013, n° 12-13.796). The rule reaches beyond loans: the beneficiary of a sale promise under permit condition who provoked the rejection of its own application by its resistance (Cass. civ., 16 avr. 1986), the counterpart who ended the contract unilaterally and without legitimate reason before the event (CA Versailles, 3 mars 1988), and the promisor of a share buy-back subject to market-authority approval who limited itself to verbal contacts through intermediaries without filing a supported application (CA Paris, 8 nov. 2002, n° 01/08529).

The consequence is radical: the contract is treated as formed at the date of its conclusion (Cass. 3e civ., 23 févr. 1977, n° 75-15.515; Cass. 3e civ., 24 juin 1981, n° 80-13.031), and a deposit paid subject to restitution on failure of the condition may be kept by its recipient (CA Aix, 22 nov. 1978). The defences are equally structured. The condition is not deemed fulfilled where the party pursued proves that its failure is attributable to a cause independent of its will (Cass. 3e civ., 12 sept. 2007, n° 06-15.640; Cass. 3e civ., 15 déc. 2010, n° 10-10.473), or that it accomplished the steps the contract required, the creditor then having to prove that the prevention is nevertheless attributable to it (Cass. 3e civ., 6 oct. 2010, n° 09-69.914), or that the approval sought had been announced as difficult to obtain before the application was made (Cass. 3e civ., 28 sept. 2023, n° 22-20.679). Concretely, the condition was not prevented where the buyer could not obtain administrative authorisations that proved impossible to obtain within the time allowed (Cass. civ., 28 nov. 1978) or because the administrative authorities disagreed among themselves (Cass. civ., 20 mars 1996); where the beneficiary of a promise under loan condition presented at least one loan application conforming to the characteristics stated in the promise, even unsuccessfully (Cass. civ., 8 déc. 1999); where the buyer did not obtain the maximum loan amount contemplated, the statement of a maximum not obliging it to accept any offer of a lower amount (Cass. 3e civ., 14 déc. 2022, n° 21-24.539); and where the beneficiary applied for a permit for a smaller surface and withdrew the application because it had no prospect under the planning density coefficient (Cass. 3e civ., 11 sept. 2012, n° 11-22.345).

Has your condition failed, or is it deemed fulfilled?

Who may invoke the condition, and when it can be waived

The condition can be invoked, to rely on its realisation or its non-realisation, by the party for whose benefit it was stipulated, as Article 1304-4 of the Civil Code implicitly admits. It is therefore important to state clearly whether both parties may oppose the condition or only one of them; failing that, the judges appraise the common intention sovereignly. A condition of obtaining an administrative authorisation to build a petrol station on the land sold was held stipulated in the interest of both parties (Cass. civ., 27 juin 1979); a condition of obtaining a loan for a purchase, in the exclusive interest of the buyers (Cass. 3e civ., 16 déc. 2003); a condition of obtaining a building permit, in the interest of both (Cass. 3e civ., 20 oct. 2010, n° 09-69.645).

Only the party in whose exclusive interest the condition was stipulated may waive it, and only as long as the condition is neither accomplished nor failed (C. civ. Art. 1304-4; Cass. 3e civ., 27 oct. 2016, n° 15-23.727). The timing rule has real consequences: once the failure is established, the conditional promise is already lapsed at that very moment, and a later waiver cannot restore it (Cass. soc., 29 nov. 2023, n° 22-11.398; Cass. civ., 12 janv. 2010, n° 08-18.624). What the parties can do after failure is contract afresh: a new engagement was found in the reiteration of a promise to sell a business in a notarial deed, repeating the price and the designation of the asset sold, without reclaiming the deposit and paying the balance of the price (Cass. com., 6 févr. 1996, n° 93-12.868). As to form, the clause waiving the suspensive condition need not be handwritten where the sale promise is received in notarial form (Cass. 3e civ., 18 mars 2021, n° 20-16.354).

Effects: formation without retroactivity, lapse and restitutions on failure

On fulfilment, the contract is formed the day the condition is realised (C. civ. Art. 1304-6, para. 1). This is the great change of the 2016 reform: fulfilment no longer works backwards by default. The parties remain free to opt for retroactivity and provide that the accomplishment of the condition will take effect from the day of the contract; even then, the thing that is the object of the obligation remains at the risk of the debtor, who keeps its administration and is entitled to its fruits until the condition is accomplished (C. civ. Art. 1304-6, para. 2).

On failure, the obligation is deemed never to have existed (C. civ. Art. 1304-6, para. 3). Before the 2016 reform the courts said that failure rendered the dependent contract lapsed, a caducité (lapse), while judging in substance that no contract had ever existed (Cass. com., 29 avr. 1974, n° 73-10.172; Cass. 3e civ., 10 sept. 2013, n° 12-22.163); the new text assimilates failure to an inexistence of the contractual obligations, and Article 1187, paragraph 2 of the Civil Code confirms that lapse can give rise to restitution. The solutions built under the old code therefore remain good law. The party entitled to the condition need only establish before the judge that the failure is consummated and that it has not waived the right to invoke it (Cass. 1e civ., 23 janv. 1996, n° 93-21.118); no formal notice is required to invoke a condition that had to be realised within a fixed period, and the jurisdiction clause of the fallen contract is excluded (Cass. com., 29 avr. 1974, n° 73-10.172).

In a sale, the consequences unwind item by item. The seller is not bound to deliver the thing sold (Cass. req., 20 oct. 1908). It must return the instalments the buyer paid (Cass. com., 7 mars 1977, n° 75-13.531) as well as the dédit (contractual forfeit) (Cass. com., 7 oct. 2008, n° 07-14.607). The contract's clauses fall with it: the buyer who had accepted a clause putting the fees of the deed at its charge was not bound absent an undertaking to bear them whatever the fate of the sale (Cass. 2e civ., 22 janv. 2004), and the seller did not have to operate the clause on refusal to reiterate the sale (Cass. 3e civ., 25 janv. 2011, n° 09-17.454). The buyer who occupied the building between conclusion and failure owes an occupation indemnity, unless free enjoyment was agreed (Cass. 3e civ., 18 déc. 1973, n° 73-10.135); it is entitled to reimbursement of its necessary and useful expenses (Cass. 3e civ., 15 janv. 2003), and possibly to damages (Cass. com., 7 janv. 1981, n° 79-12.061), unless the deed provides that no indemnity is due on either side if the sale does not proceed (Cass. civ., 8 oct. 2013, n° 12-12.792). Study costs relating to equipment to be delivered, forming part of the sale price, stay at the exclusive charge of the manufacturer (Cass. com., 20 oct. 1975, n° 74-12.238), and the onward sale promise granted by the buyer to a third party falls as well (Cass. 1e civ., 1 juin 1983, n° 82-10.759).

Two limits police the invocation of the lapse. Only the party in whose favour the condition was stipulated may rely on it (Cass. 3e civ., 20 juin 2006; Cass. 3e civ., 24 nov. 2016, n° 15-14.017), and it must not invoke the failure in bad faith (Cass. civ., 23 juin 2004, n° 03-12.207). And the right is lost by waiver in conduct: the party who, despite the failure, accepted the reiteration of the promise in a notarial deed, kept the deal's terms and paid the balance of the price could no longer claim the lapse (Cass. com., 6 févr. 1996, n° 93-12.868).

Frequently Asked Questions

This article is for general information only and reflects French law as published at the date shown above. It does not constitute legal advice. Always seek qualified advice before acting.