Most legal acts are intended to take effect immediately and without conditions. For instance, the transfer of shares is completed when the notarial deed is executed, or a managing director’s appointment takes effect right away. However, it is also possible to make a legal act contingent on a specific event or moment in time, these are called conditions (voorwaarden) or time provisions (tijdsbepalingen). In practice, these are often used to manage risk or ensure that certain legal acts occur in a specific order.

Conditions

Any legal act may be subject to a condition for its effect, meaning it depends on a future, uncertain event. When the legal act only takes effect once the condition is met, it is called a condition precedent (opschortende voorwaarde). If a legal act is intended to remain effective only until a future, uncertain event occurs, it is called a condition subsequent (ontbindende voorwaarde). For example, if a joint venture party goes bankrupt, this might trigger the transfer of their shares to the other joint venture party. Another example is a gift that only applies if the beneficiary outlives the donor. Conditions are also useful when a specific sequence of legal acts matters. For example, if shares are transferred and the articles of association must be immediately amended, the new shareholder can pre-emptively adopt a resolution to amend the articles, under the condition precedent of acquiring the shares.

Depending on the required effects, conditions can be framed positively (“If X is declared bankrupt on or before December 31, 2025…”) or negatively (“If X is not declared bankrupt on or before December 31, 2025…”).

Legal effect of conditions

For a legal act subject to a condition precedent, all requirements for a legally valid act are met when the legal act is entered into. For example, in the case of a sale, the seller must have the authority to sell the assets at the time of signing. If the seller goes bankrupt after signing but before a condition precedent is met, the conditional sale remains valid and will be effective upon fulfillment of the condition. If the sale is contingent upon regulatory approval, and the seller goes bankrupt between signing and receiving approval, the assets will still transfer automatically upon fulfillment of the condition.

In the event of a condition subsequent, the legal act’s effect ceases automatically once the condition is fulfilled. For instance, if a donation is made with the condition subsequent that it reverts upon the recipient’s bankruptcy, then upon bankruptcy, the donation automatically returns to the donor’s estate.

Time provisions

If a legal act’s effect depends on a future event that is certain to happen, such as a specific date or someone’s death, it is classified as a time provision (tijdsbepaling) rather than a condition. Similar to conditions, time provisions can be precedent (opschortende tijdsbepaling), delaying effect until a specific time, or subsequent (ontbindende tijdsbepaling), ending effect at a specific time. Furthermore, they can be stated positively or negatively.

Legal consequences of a time provision

Since a time provision’s fulfillment is certain, its legal impact differs from that of a condition. A party entitled to a right upon a time provision’s fulfillment is certain on its eventual occurrence, whereas the outcome of a condition remains uncertain. For a legal act with a subsequent time provision, in which an asset returns to the original owner after a set period, the legal act is automatically converted into a usufruct for the transferee. For a precedent time provision, ownership transfers immediately, with the transferor retaining usufruct for the agreed-upon period. Legal provisions on usufruct, including certain mandatory duties of the usufructuary, apply in full to usufructs resulting from time provisions.

If you have questions or would like advice on structuring legal acts with conditions or time provisions, please feel free to contact one of our lawyers.