If you want to enter into a legal transaction with two parties, this is usually subject to conditions, i.e., dependent on a condition. However, there are different types of conditions. A distinction is made between conditions subsequent and conditions precedent.
In the case of a condition subsequent, also known as a resolutive condition, an existing legal transaction is terminated upon the occurrence of the condition. This means that, according to § 158 BGB, the contract is legally valid from the moment it is signed and ends as soon as the condition is fulfilled. This is often used in fixed-term contracts.
With regard to a broker's commission, the condition subsequent is not of great significance, as the broker is entitled to commission even if the condition is fulfilled. An example of a condition subsequent would be that the development of a piece of land is guaranteed within one year. If this is not possible, the contract is terminated.
A condition precedent, also known as a suspensive condition, is slightly different. According to § 158 BGB, a legal transaction only becomes effective when the condition precedent is fulfilled. Before the condition is fulfilled, the contract is provisionally invalid. Despite this, the contracting parties must adhere to certain regulations and are protected in accordance with § 162 BGB. Neither party may prevent the condition from being fulfilled in bad faith. As soon as one of the parties wishes to prevent the condition from being fulfilled to the detriment of the other party during the period of suspension, the condition is immediately fulfilled and the legal transaction is effective.
If one party wishes to bring about the condition in its favor, the condition shall lapse and the legal transaction shall not be effective.
During the period of uncertainty, the parties are entitled to compensation in accordance with § 160 BGB as soon as one party, through its own fault, frustrates or impairs the right dependent on the condition.
With regard to a broker's commission, the condition precedent means that the broker is only entitled to the commission once the condition has been fulfilled and the legal transaction has become effective. An example of a condition precedent would be that the buyer of a property obtains a loan. Once the financing has been approved, the contract is legally effective.
