A suspensive condition suspends the operation of certain provisions of an agreement until the happening a future uncertain event. The prevalence of suspensive conditions in agreements demonstrates their potency in transaction structuring. If the process of fulfilment of suspensive conditions is not managed meticulously, suspensive conditions may become a major transaction risk which may, if it materialises, cause searing embarrassments and financial losses.

In this note, a recent decision in Africast (Pty) Ltd v Pangbourne Properties Ltd   (Africast case) is used to demonstrate that it is always important that a person drafting an agreement with suspensive conditions has clarity of purpose for which such conditions are required, dexterity in drafting the wording for the conditions and wisdom to follow through by closely managing the timeous fulfilment of conditions until a transaction is implemented.

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Written by Siyabonga Shandu, Director, Tony Tshivhase Inc.

Tony Tshivhase Inc. is a boutique corporate, commercial and tax law firm based in Johannesburg, Woodmead, Sandton. The firm provides a full range of corporate, commercial and tax legal services to private and public sector clients.