Contracts & TransactionsConditions of Contracts

April 18, 20210
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When the parties decide to enter into a contract, they must also agree on its conditions. Contract conditions are of three types:

  1. Essential conditions,
  2. Ordinary conditions, and
  3. Random conditions.

 

What are the essential conditions of contracts?

 

Essential conditions are those conditions that are absolutely necessary and required for the conclusion of a contract. The contract is concluded when the parties agree on the essential conditions that are necessary for its conclusion. The absence of even one of them makes the contract invalid.

The essential conditions are provided in the legal provisions that deal with specific contracts. Essential conditions can also be those that, although not provided by law, are reached by agreement of the parties. Such will be considered a condition of suspensive or extinguishing nature, provided by the parties important for the fate of the contract, where if it is not fulfilled, the contract is terminated.

An essential universal condition that is met in every contract is the object. Without an object, there can be no contract, because it is one of its elements.

In certain contracts, the price and term may also be an essential condition. For example, in the sale or lease contract the reward, price or lease is an essential condition, because there is no sale without price, there is no lease contract without lease price.

 

What are the ordinary conditions of contracts?

 

Ordinary contract conditions are those conditions that are encountered in certain types of contracts. These conditions are provided by permissible or dispositive legal norms. Even if the parties have not mentioned them in their agreement, their absence does not make the contract invalid.

The lack of ordinary conditions in the contract does not bring negative consequences for the parties, because these types of conditions are considered as well received, since they are provided by law. These conditions always have a legal nature in terms of the usual rule they sanction.

 

What are the random/occasional conditions of contracts?

 

Random conditions are those conditions that are neither common nor essential, but are found in the contract, because the parties have provided for it. Random conditions can be for example:

  • the condition that sets a term in a loan agreement;
  • the condition of right of first refusal in a sales contract, where the parties agree that in case the buyer will sell the item in the future, then the seller is preferred as its buyer;
  • determining the lessee’s preference if the landlord releases the item;
  • the condition of keeping the leased item from the seller after the transfer of ownership to the buyer;
  • the condition of assembly and installation of the item by the seller after the sale;
  • the condition of transportation of the item purchased from the seller;
  • the condition of selling an item without the buyer having the right to resell it, as long as the seller is alive;
  • the condition of donating an item, without the beneficiary having the right to sell it, but only to transfer ownership by legal inheritance;
  • the condition of renting an item and the lessee is preferred as the first buyer, in case the seller wishes to sell the item, during the extension of the lease;
  • the condition that in case of early termination of the contract each of the parties that will exercise this right will pay the other party a penalty;
  • the condition for competent legislation other than the country where the contract is concluded;
  • the condition for resolving disputes by international or domestic arbitration, etc.

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