Conditions: Overview, definition and example
What are conditions?
Conditions in a contractual context refer to specific requirements, events, or actions that must be fulfilled or occur for the obligations under a contract to become enforceable or continue. Conditions can be classified as precedent (requirements that must be met before an obligation takes effect), subsequent (events that can terminate an obligation), or concurrent (mutual obligations that must occur simultaneously).
For example, in a real estate agreement, a condition precedent might require the buyer to secure financing before the seller is obligated to transfer ownership.
Why are conditions important?
Conditions are important because they clearly define the circumstances under which contractual obligations become enforceable or are discharged. They provide structure and clarity, ensuring that all parties understand their rights and responsibilities under specific circumstances.
Including conditions in contracts reduces ambiguity, minimizes disputes, and ensures that obligations are tied to measurable or objective criteria.
Understanding conditions through an example
A supplier contract includes a condition precedent stating that the supplier is only obligated to deliver goods after receiving a 50% deposit from the buyer. This ensures that the supplier is protected from the risk of non-payment, while the buyer understands the requirement to initiate delivery.
An example of a conditions clause
Here’s how a conditions clause might appear in a contract:
“The obligations of the Parties under this Agreement are subject to the satisfaction of the following conditions precedent: (1) The Buyer shall provide proof of financing; (2) The Seller shall deliver all necessary permits and licenses required to execute the Agreement. Failure to meet these conditions shall render the Agreement unenforceable unless waived in writing by the affected Party.”
Conclusion
Conditions are an essential element of contracts, ensuring that obligations are tied to clear, measurable, or specific criteria. By defining conditions explicitly, contracts provide clarity, reduce disputes, and protect the interests of all parties. Well-drafted conditions clauses promote accountability and ensure that agreements are executed as intended.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.