Commercial Law — Commercial contracts — Conditions precedent

Date Citation Note
07.05.2002 Civ.1 642 Pourvoi n° 99-17.520 Case Lefebvre v. Segard Many commercial contracts are concluded subject to conditions precedent. Business people often think that such conditions can be an easy way to avoid having to perform the contract if they wish to escape from it. Article 1178 of the Civil Code, however, provides that “ a condition is deemed to be fulfilled in a case where the obligor whose obligation is subject to that condition prevents its being fulfilled”. This case is a particularly strong example of this, showing that such an obligor must actively and genuinely do all he can to cause the condition to be fulfilled, and that the burden of proof is on him to show that this is so. The contract, for the sale of real property in respect of which a deposit was paid, contained a condition precedent that the purchasers obtain a loan with defined characteristics. In order to escape their obligations, the purchasers produced certificates from four banks that the loan was refused, but would not disclose what they had told the banks.
Since it was impossible to know what the banks had been told about the financial situation (apparently sound) of the purchasers, the latter had not met the burden of proof which was on them, and the condition must be deemed fulfilled pursuant to Article 1178 of the Civil Code. The purchasers therefore lost the greater part of their deposit.