Suspensive Condition Without a Time Limit: When Can a Contract Be Terminated?

You have signed a preliminary sale agreement for a flat in Annecy. The contract includes a suspensive condition of obtaining a loan — without a deadline. Weeks pass, your bank is slow to respond. The other party wants to terminate the contract. Can they do so? How far does your commitment go?

This question is asked by hundreds of owners and buyers every year. The Court of Cassation, in a judgment of 14 September 2023, provides a nuanced answer: the commitment remains in force as long as the condition has not failed (i.e., as long as it has not been fulfilled or has not definitively failed), but the parties may provide for a unilateral right of termination in the contract.

In clear terms, if you have provided a clause allowing you to terminate, you can do so, and the suspensive condition will be assessed at the date of that termination. But if no termination clause exists, you remain bound until the condition is fulfilled or becomes impossible. However, note: this decision does not overturn prior law, but it usefully clarifies it.

The facts: a story that happens every day

Mr and Mrs Y., owners of a house in Grenoble, wish to build an extension. They sign a contract with the architectural firm DCA on 15 March 2017. The contract is subject to a suspensive condition: obtaining a loan to finance the works. No term (deadline) is fixed for the fulfilment of this condition.

Months pass. The banks are reluctant. On 12 June 2018, DCA, tired of waiting, notifies the Y. couple of the unilateral termination of the contract. It considers that, since the suspensive condition has not been fulfilled within a reasonable time, the contract is void. The Y. couple contest: for them, the condition has not failed since they have not received a definitive refusal. In fact, they eventually obtain the loan in 2020, i.e., after the termination.

The dispute goes up to the Court of Cassation. The judges must decide: was the unilateral termination valid? What is the scope of a suspensive condition without a fixed term?

The reasoning of the court — broken down

The Court of Cassation first recalls the principle: a commitment subject to a suspensive condition without a fixed term remains in force as long as the condition has not failed. In other words, as long as the condition (here, obtaining the loan) has not been fulfilled or has not definitively failed, the contract remains in effect. Neither party can unilaterally put an end to it on this sole basis.

But the Court adds an essential nuance: this principle does not deprive the parties of the benefit of contractual clauses providing for a unilateral right of termination. In other words, if the contract contains a clause allowing one party to terminate at any time (or under certain conditions), that clause is valid and can be exercised. In that case, the fate of the suspensive condition is assessed at the date of termination.

Applied to the facts: the architectural contract did not provide for a unilateral termination clause. Consequently, DCA could not unilaterally terminate the contract on the ground that the condition had not yet been fulfilled. The termination was therefore wrongful. The suspensive condition of obtaining the loan had not failed at the time of termination (the loan was obtained later). The Y. couple were therefore entitled to challenge it.

What this means for you — practically

For owners and buyers: this decision protects you against untimely terminations. If you have signed a contract with a suspensive condition without a fixed term (for example, a preliminary sale agreement subject to obtaining a loan), the other party cannot unilaterally withdraw as long as the condition is still possible. You have time to complete your steps.

Let's take a concrete example in Grenoble: you buy a property for €250,000. The suspensive condition of a loan is provided without a date. Your bank responds after 6 months. During this time, the seller becomes impatient and wants to terminate in order to sell to someone else. The Court of Cassation rules against him: as long as you have not received a definitive refusal, the contract stands.

For professionals (architects, developers, estate agents): if you wish to be able to terminate in case of excessive delay, you must imperatively insert a unilateral termination clause in the contract. Without it, you are bound until the condition fails.

If you are in this situation, you must check your contract. Look for a clause entitled "termination", "right of termination" or "resolutive clause". If it exists, you can terminate; otherwise, you must wait.

Four tips to avoid this type of dispute

• Fix a term for the suspensive condition: in your contract, indicate a deadline for the fulfilment of the condition (e.g. "condition to be fulfilled before 31 December 2024"). This avoids any ambiguity.
• Provide for a unilateral termination clause: if you want to be able to exit the contract before the term, add a clause allowing each party to terminate subject to notice or compensation.
• Document your steps: keep evidence of your loan applications, reminders, banks' replies. In case of a dispute, you will be able to demonstrate that you actively sought to fulfil the condition.
• Consult a lawyer before terminating: do not take the initiative to terminate a contract without advice. You could be ordered to pay damages for wrongful termination.

Further reading: related case law and developments

This decision is in line with consistent case law. Already, in a judgment of 13 January 2021 (No. 19-21.045), the Court of Cassation had held that a suspensive condition without a term cannot be unilaterally invalidated. The 2023 judgment confirms and clarifies: the possibility of unilateral termination depends exclusively on the contractual clauses.

However, some earlier decisions had seemed to allow termination based on non-fulfilment within a reasonable time. The Court of Cassation puts an end to this uncertainty: the reasonable time is not an autonomous criterion. The trend is therefore towards protecting the party who cannot fulfil the condition for reasons beyond its control.

What this means for the future: contract drafters will need to be more vigilant in including termination clauses. Courts will probably be stricter with professionals who terminate without a contractual basis.

Checklist before acting

• Do I have a unilateral termination clause in my contract? If yes, check its terms (notice, compensation). If no, do not terminate.
• Has the suspensive condition failed? Have you received a definitive refusal of the loan? Has the condition become impossible (e.g., administrative authorisation refused)?
• What is the other party's interest? If you are the buyer, the seller may want to terminate to sell at a higher price. If you are the seller, the buyer may be seeking to withdraw.
• Do I have evidence of my steps? Gather all documents: loan applications, replies, reminders.
• Should I consult a lawyer? If the amount at stake is high, a quick consultation can save you much larger procedural costs.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) could save you months of proceedings — and often much more. Book an appointment →