Frequently Asked Questions

What is the definition of a condition precedent in a contract?

A condition precedent in a contract refers to a stipulation that must be fulfilled before the parties involved are obligated to perform their contractual duties. This condition can either be implied or expressly stated in the contract's terms. Essentially, it is an event that triggers the execution of the contract. For instance, in a service contract, the completion of a project (condition precedent) by one party would then require the other party to pay for the services rendered. In the realm of real estate, condition precedents are common. For example, in a mortgage contract, a condition precedent could be the assessment of a property's condition and value. Only after this assessment has been agreed upon by both the lender and buyer does the mortgage contract become binding. Condition precedents are also prevalent in trusts and wills. For instance, a will might stipulate that an heir must reach a certain age or complete a college degree before they can receive their inheritance. However, it's crucial to ensure that the condition precedent is legal. If it requires illegal actions, the contract would be deemed invalid. In the case of property deeds, a condition precedent could be an event or action that must occur before the title is transferred to another person.