An agreement for the sale of a shop contained a provision enabling the seller to terminate the agreement if the land betterment tax will exceed a certain agreed rate. A dispute brock between the parties as to such term and the right of the sellers to withdraw from the agreement.
The Court held that an agreement may be subject to a condition (a condition precedent) or will cease to exist under certain conditions (a condition subsequent). The condition is an uncertain event external to the agreement. Fulfillment of the condition precedent converts a conditional contract to a "normal" contract. However, upon fulfillment of a condition subsequent the agreement - which until then had a fully operational validity - is eliminated.
In the present case, the tax authorities rejected the seller's self tax assessment and set a higher tax assessment than agreed. Therefore, upon application of the condition subsequent the sellers were entitled to terminate the agreement. Contrary to the position of the purchaser, the agreement did not impose upon the sellers any obligation to act for filing an objection to the tax authorities. regarding the rate of the betterment tax assessment or filing an appeal against the rejection and there was no evidence of a breach of the requirement of bona fide compliance with the agreement.