Frequently Asked Questions

What are the two important characteristics of a condition precedent in a contract?

A condition precedent in a contract is a crucial stipulation that has two primary characteristics. Firstly, it necessitates that one party must fulfill their contractual obligations before expecting the same from the other party. This means that the contract is not in effect until a specific obligation is met. For instance, in a service contract, the completion of a project by one party could be the condition precedent that triggers the obligation of the other party to make payment. The second characteristic of a condition precedent is that a specific event must occur before a party is granted a performance right or has the ability to sue the other party for damages. This event, which is clearly defined in the contract, activates the contractual obligations. For example, in a real estate contract, the assessment of a property's condition and agreement on its value by both the lender and buyer could be the condition precedent that makes the mortgage contract binding.