Write a short note on the Doctrine of Acceleration.

Question: Write a short note on the Doctrine of Acceleration. [BJS 1991]

Find the answer to the mains question of Property Law only on Legal Bites. [Write a short note on the Doctrine of Acceleration.]

Answer

The legal doctrine of acceleration of subsequent interests in property transfers is mentioned in Section 27 of the Transfer of Property Act, which outlines the conditions under which a subsequent disposition or interest in a property will take effect in case the prior disposition fails. The provision runs down as below:

"Where, on a transfer of property, an interest therein created in favour of one person, and by the same transaction an ulterior disposition of the same interest is made in favour of another, if the prior disposition under the transfer shall fail, the ulterior disposition shall take effect upon the failure of prior disposition, although the failure may not have occurred in the manner contemplated by the transferor.”

The explanation of the legal provision enunciated under Section 27 of the Transfer of Property Act is discussed below:

1. Basic Principle:

Section 27 deals with situations where a property is transferred to one person, and in the same transaction, there is a subsequent disposition or transfer of the same interest in favour of another person. It addresses what happens to this ulterior disposition when the prior disposition fails.

2. Acceleration of Ulterior Disposition:

The key principle in Section 27 is that if the prior disposition, the initial interest granted to the first person, fails for any reason, the ulterior disposition, the subsequent interest given to the second person, will automatically take effect. This acceleration occurs upon the failure of the prior disposition.

3. Contemplated Failure v. Particular Manner of Failure:

The section makes a distinction between two scenarios. In the first scenario, if the parties involved did not specify how the prior disposition should fail, then the ulterior disposition will take effect upon any form of failure. In other words, the failure need not occur in the manner initially contemplated by the transferor.

4. Illustrations:

The passage includes two illustrations to explain the doctrine further:

In the first illustration, A transfers Rs. 500 to B on the condition that B executes a lease within three months after A's death. If B dies in A's lifetime, the disposition in favour of C will take effect. This is an example of acceleration due to the failure of the prior disposition (B's ability to execute the lease).

In the second illustration, A transfers property to his wife, but if she dies in his lifetime, the property is to be transferred to B. A and his wife die simultaneously, and it cannot be determined who died first. In this case, the disposition in favour of B does not take effect, as the parties had intended it to take effect only if the wife died during A's lifetime in a particular manner.

5. Application of Doctrine:

The passage highlights that this section enunciates the doctrine of acceleration. In practical terms, this means that if there is a gift or interest in property that is contingent upon the termination of a prior interest (like a life estate), and the prior interest becomes void or fails, the subsequent interest is accelerated and takes effect immediately.

In summary, Section 27 of the Transfer of Property Act addresses the legal doctrine of acceleration, which determines the conditions under which a subsequent disposition or interest in a property takes effect when the prior disposition fails. The section provides rules for both cases where the failure is not specified and where the failure is intended to occur in a particular manner, ensuring clarity in property transfers and dispositions.