ECO.4:5.1 - Breaking a circular funding condition

In a constructed pilot-service case, a customer will order after seeing a working demonstration. A specialist requires €6,000 to prepare it. A funder will contribute only after the customer signs an order. These three positions do not constitute funding.

The entrepreneur has €1,000 it can afford to lose. The specialist can instead make a limited demonstration for that amount using an already available test facility. The customer agrees that successful handling of its sample will settle the remaining technical question, while price and delivery terms are separately stated. This permits a first action: commission the bounded demonstration from the available €1,000.

Success still does not count as a customer order. The customer must make the promised next decision; the funder’s condition is then tested against the actual order. If the customer instead says “even if it works, we cannot allocate a budget”, the demonstration no longer resolves the barrier. The proposal needs another customer, funding arrangement or scope.

In another constructed case, two sponsors each authorize €500 to be released only together with the other’s €500. An administrator already holds both sums and has authority to release them together when both authorizations arrive, or return them if the deadline passes. Obtaining those authorizations permits a joint release; neither sponsor must first receive the other’s completed contribution. This works because the resources, authority and joint-release mechanism are available to these parties.