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What are “conditions” upon the duty to perform a contract?
Conditions are facts or situations that must materialize (or fail to materialize) for either or both parties to have the duty to perform a contract. Conditions are generally divided as follows:
Condition Precedent – A condition precedent is where something must take place or a situation must arise prior to or before a party has a duty to perform.
- Example: Eric agrees to sell Fran one of his playoff seat tickets if the Atlanta Braves make it to the playoffs. The obligation to sell Fran a ticket only arises upon the occurrence of a specific event.
Condition Subsequent – A condition subsequent excuses contractual performance if some future event takes place or situation arises.
- Example: Frank agrees to cut Gina’s grass today if it does not rain. If it rains, Frank is relieved from the obligation to cut the grass. Likewise, Gina is relieved from her duty to pay Frank.
A condition may be expressed between the parties or implied from the nature of the agreement. That is, the parties affirmatively discuss or include the conditions in the agreement or the language or nature of the contract may imply certain conditions on performance. The contract may also contain conditions that must take place concurrently before either party has a duty to perform. This is often the case when the contract requires simultaneous performance. Most point-of-sale purchases involve an implied concurrent condition of performance.
- Example: I give the cashier money and she sells me the groceries. My giving her money is a condition necessary for her to sell me the groceries.
Discussion: Should conditions precedent and conditions subsequent be treated the same? What is the justification for categorizing each type of condition?
Practice Question: Harold enters into an agreement to sell his house to Emily. The contract states that Emily is relieved from her obligation to purchase Harold’s house if the home does not receive approval from a licensed home inspector. What type of condition is present in this agreement?
- The type of condition in this scenario is a condition subsequent A condition subsequent describes a condition set by the parties that, if materialized, would relieve the parties from their obligations under the contract. In this scenario, the parties have entered into a valid contract. If, however, a building inspector does not provide the house a passing grade, the contract is void.