Conditional Contracts

Condition Precedent:
A condition that must be fulfilled before the contract becomes effective. For example, a property sale contract may be conditional upon obtaining planning permission for development.

Condition Subsequent:
A condition that, if triggered, terminates the contract.

Certainty and Precision:
To create a valid conditional contract, the conditions must be clear, precise, and capable of objective determination. Ambiguity can lead to disputes.

Drafting Considerations:
When drafting conditional contracts, parties should define conditions explicitly, specify the consequences of non-fulfilment, and address any contingencies.

Property Transactions:
Conditional contracts are prevalent in property sales and development agreements.

Business Sales:
Agreements to buy or sell a business may include conditions related to due diligence, regulatory approvals, or financial performance, or the landlord’s approval to a transfer or assignment of a lease.

Construction Contracts:
Contracts for construction projects often have conditions tied to milestones, approvals, or quality standards.