A condition precedent is an event or requirement that must happen before a contractual duty becomes due.
In plain language, it is a trigger. Until the condition occurs, the related obligation may not have to be performed.
Why it matters
Conditions precedent matter because timing and prerequisites can decide whether a party breached a contract. If a condition never happens, a party may argue that its duty never became active.
The term is common in real estate, financing, insurance, construction, employment, and settlement agreements.
Where it appears
Conditions precedent appear in closing conditions, financing contingencies, approval rights, notice requirements, insurance coverage provisions, and milestone-based contracts.
Practical example
A purchase agreement says the buyer must close only if financing is approved by a certain date. Financing approval may be a condition precedent to the buyer’s closing obligation.
How it differs from nearby terms
A condition precedent differs from breach of contract. A breach concerns failure to perform a duty; a condition precedent asks whether the duty was triggered at all.
It also differs from force majeure, which concerns extraordinary events that may excuse or delay performance.
Related terms
Quick knowledge check
Question: What is the basic function of a condition precedent?
Answer: It identifies an event or requirement that must happen before a duty becomes due.