Action for Judicial Confirmation of Contract Termination Due to Breach of Condition Option
Termination of a contract is one of the matters that frequently gives rise to disputes between parties and may lead to litigation.
A contract is an essential legal instrument in transactions, particularly in real estate dealings, as it formalizes the terms of the transaction. Accordingly, the parties to a contract are not entitled to terminate it at will.
The issue of contract termination is of considerable importance. For this reason, most contracts contain specific clauses addressing termination and the manner in which it may be exercised.
Contract termination is generally governed by statutory provisions known as termination options. Articles 397 to 444 of the Civil Code are dedicated to various types of such options.
The Right of Termination
Action for Confirmation of Termination
Under the Civil Code, the legislator has granted the parties to a contract a right known as the right of termination. This right is legally referred to as an option. An option may be granted to one party, both parties, or even a third party.
An action for judicial confirmation of termination may be brought for certain types of options. Improper drafting of contracts between sellers and buyers, particularly in real estate transactions, or failure by one party to comply with contractual conditions, may necessitate termination of the contract by the other party. In such cases, the entitled party may seek confirmation of the termination by filing a claim before the competent judicial authority.
Actions for Confirmation of Contract Termination in Real Estate Matters
Such actions are typically based on one of the following grounds:
- Option of termination by stipulation.
- Option arising from breach of condition.
- Option due to defect.
- Gross disparity.
- Option of partial invalidity of the transaction.
- Automatic termination of contracts.
- Termination due to misrepresentation or fraud.
Right of Termination Based on Breach of Condition Option
In modern practice, many activities are conducted through contractual arrangements. One essential requirement for the validity of any contract is adherence to its terms and fulfillment of contractual obligations.
The importance of contractual compliance is such that it is expressly addressed in the Civil Code, which also provides for damages for non-performance.
Despite this emphasis, circumstances may arise in which a party seeks to dissolve the transaction. Contracts often include one or more conditions obligating the other party to perform a specific act or achieve a particular outcome.
If such conditions are not fulfilled, the other party acquires the right to terminate the contract.
The Three Types of Conditions
These conditions include:
- Condition of quality or attribute.
- The condition of the performance of an act.
- Condition of result.
If the obligated party fails to perform any of these conditions, the other party may first seek to compel performance. This usually requires formal notice.
If the condition remains unfulfilled, the entitled party may perform the obligation itself and claim the associated costs from the defaulting party. If none of these measures are effective, the entitled party may terminate the contract.
In addition, the party may bring a civil action before the court seeking judicial confirmation of the contract termination.
Determination of the Time Period
An action for confirmation of contract termination due to breach of a condition option requires the determination of a time period for exercising the option. In some cases, the contract does not specify the option’s duration. In such circumstances, the duration is determined based on customary practice.
This period generally commences on the date of contract execution and continues until the date of title transfer. In some contracts, clauses unrelated to termination are included, such as provisions stating that a specified amount shall be paid as damages upon withdrawal from the contract. Such clauses do not constitute an option of termination and may even undermine the validity of the contract itself.
Key Points Regarding Judicial Confirmation of Contract Termination
In an action to confirm contract termination, the claimant is the party for whose benefit the contractual condition was stipulated. The defendant is the counterparty or the person obligated to perform the condition.
The competent court to hear actions for confirmation of termination for breach of condition in real estate matters is the court having jurisdiction over the property’s location.
The court decision confirming termination is declaratory in nature and does not require the issuance of an enforcement order. Such actions may have both financial and non-financial aspects.
Frequently Asked Questions About Actions for Confirmation of Contract Termination Due to Breach of Condition Option
This action is brought when one party fails to comply with contractual conditions and the other party seeks termination of the contract and judicial confirmation of that termination.
It is a right granted under the Civil Code to a party or a third party, allowing termination of the contract for non-compliance with contractual conditions.
The three types are conditions of quality, conditions of performance, and conditions of result. Failure to fulfill any of these may give rise to the right of termination.
If no period is specified in the contract, the duration is determined based on customary practice, usually from the date of contract execution until the transfer of title.
The claimant is the party for whose benefit the condition was stipulated, while the defendant is the party obligated to perform the condition.
The court of the location of the property or the place of the contract has jurisdiction to hear actions for confirmation of contract termination due to breach of condition.
No. The court judgment is declaratory in nature and does not require the issuance of an enforcement order. Such actions may involve both financial and non-financial claims. What is an action for confirmation of contract termination due to breach of the condition option?
What does the right of termination or breach of condition option mean?
What types of conditions are relevant to breach of condition options?
How is the time period for exercising the option determined?
Who may file an action for confirmation of termination?
Which court has jurisdiction over this action?
Does the court judgment require enforcement proceedings?
