Ontario Mortgage Agent Practice Exam 2025 - Free Mortgage Agent Practice Questions and Study Guide

A condition precedent in a contract refers to a specific condition or event that must occur before a party is obligated to perform their duties under that contract. This means that the performance of certain contractual obligations is contingent upon the occurrence of this specified event.

For example, in a real estate agreement, a common condition precedent might be that the buyer secures financing before the sale is finalized. If the buyer fails to obtain financing, they are not obligated to proceed with the purchase, and the contract may be voided as a result.

This concept is critical for ensuring that both parties understand their obligations and the conditions that must be satisfied for the contract to be enforced. Having clear conditions precedent aids in risk management for all parties involved in the transaction, providing a safeguard against unforeseen issues that might arise. The correct identification of this term is essential for understanding various elements of contract law, particularly in fields like real estate and finance.