What are the conditions of a contract? Contracts are agreements involving two or more parties, in consensus, who are exchanging things that have value for other things that have equal value. If it's an agreement that involves a purchase, money is typically involved. If it's an agreement that doesn't include a purchase, such as a non-compete agreement, the parties may exchange things that are intangible.

The Significance of Contractual Conditions

The agreed upon conditions are the things that bind one party to the obligation to perform. If you're reading the terms of a contract, either by yourself or with the assistance of an attorney, pay attention to the conditions included in the contract. Not only can the conditions bind you to an obligation to perform, but the conditions can also cause the contract to be rendered invalid.

Terms Must Be Specific

If the expressed conditions in a contract aren't specific and definite in describing what the parties are agreeing to do, including the timing expected to complete the contract, then the party with the obligation to perform can break the contract. The lack of specific terms can free the party from his or her legal responsibility if accused of breach of contract in a lawsuit. Expressed conditions that are implied, rather than written, can also sometimes be enforceable.

Conditions are a series of facts and things that have to happen before parties to a contract have the obligation to perform. The conditions of the contract can be either precedent or subsequent.

Conditions Precedent

Conditions precedent means that certain conditions of the contract have to be met by one party before the other is obligated to perform. As an example, if a purchase contract notes that the sale is contingent upon financing, then when the loan is approved, the buyer is obligated to perform the duty of completing the purchase.

Conditions Subsequent

Conditions subsequent means if a specified condition arises after the obligation to perform starts, the performing party is released from the duty to do more. As an example, if someone rents a facility for a meeting or performance for a specified time period, if it runs over and more time is needed, there is no requirement to allow the renters to stay and finish.

Subsequent conditions relieve the obligated party of the duty to perform in the event of a certain event or unexpected situation. Contract conditions can be:

  • Specifically discussed and expressed between contracting parties
  • Implied based on the agreement's nature
  • Included in the language of the contract
  • Implied based on conditions that arise during the performance of the contract

Implied Concurrent Conditions of Performance

Contracts can also include terms that have to happen at the same time and before either of the involved parties are obligated to fulfill contractual duties. This often happens when the terms of a contract require both parties to act at the same time. The majority of point-of-sale purchases are based on implied concurrent performance conditions.

Breach of Contract

When one party fails to either consciously or unconsciously complete the agreed upon contract conditions, it's referred to as a breach of contract. Depending on the conditions included in the contract, it can be something done on purpose, like refusing to finish a job or refusing to pay for completed work. It can also be the result of an anticipatory breach of contract like failing to act. Examples include turning up late for work or failing to provide the required documentation for a job.

Details Are Important

It's important to pay extra attention to the details of a contract and make sure everything is correct. Mistakes and inaccuracies based on a misunderstanding on the part of both parties can render a contract invalid. As an example, if a contract is prepared for the purchase of real estate or a vehicle and both parties are mistaken regarding the vehicle's year or model, the contract could be deemed invalid by the court. Grossly unfair or one-sided contracts can also be deemed invalid. For example, excessively high prices for a service or goods in a purchase contract can make a contract invalid.

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