Where, on a transfer of property , an interest therein is 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 the prior disposition, although the failure may not have occurred in the manner contemplated by the transferor:
Provided that where the intention of the transferor to be gathered from the terms of the transfer that the ulterior disposition shall not take effect unless the prior disposition fails in a particular manner, the ulterior disposition shall not take effect unless the prior disposition fails in that manner.
Legal Commentary & Landmark Judgments: Section 27
Section 27 codifies the doctrine of acceleration, providing that where an ulterior transfer is created on failure of a prior transfer, the ulterior transfer takes effect upon failure of the prior transfer even if the failure occurs in a manner not contemplated by the transferor.
When drafting conditional alternative gifts, explicitly clarify whether the second beneficiary takes if the first beneficiary disclaims, dies, or refuses the gift under Section 27.