Condition Precedent Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Condition Precedent, written in plain English, along with examples of how it is used.

What is Condition Precedent?

History and Meaning of Condition Precedent

A condition precedent is a legal term used in contracts to describe an event or occurrence that must take place or be fulfilled before a particular contractual obligation becomes effective. Generally, such conditions or obligations are agreed upon and explicitly stated in the contract or agreement.

Condition precedents are commonly encountered in a range of legal settings, from real estate to employment law. Essentially, they ensure that all parties involved meet their agreed obligations before specific terms or clauses become enforceable.

Examples of Condition Precedent

Here are a few examples to illustrate how this term is used in different legal settings:

• In a real estate purchase agreement, the buyer may be required to secure a mortgage before the sale is finalized (the condition precedent). The seller is not obligated to transfer ownership until this condition is met, protecting both parties from any financial risk.
• In an employment agreement, a start date may be conditional on a background check, drug test, or other prerequisite (the condition precedent). The offer may be withdrawn if the condition is not satisfied, leaving no obligation on either side.
• In a business partnership, the distribution of profits may only occur if certain criteria are met (the condition precedent). For example, the business may need to achieve a certain level of revenue or growth, or maintain certain bookkeeping standards.

Legal Terms Related to Condition Precedents

Several other legal terms are closely related to condition precedents, including:

• Condition subsequent: an event that will terminate a contract or obligation if it occurs after the contract has been formed
• Contingency: a provision that allows the parties to modify, delay, or cancel the contract based on a future event or condition
• Warranty: a guarantee that certain facts are true at the time of the contract's formation (as opposed to a future occurrence)