Which describes a condition precedent and a condition subsequent?

Which describes a condition precedent and a condition subsequent?

• A. A condition precedent must occur before performance; a condition subsequent ends an existing duty upon occurrence.
• B. A condition precedent ends an existing duty; a condition subsequent must occur before performance.
• C. Both conditions modify only the timing of contract signing.
• D. They have no effect on performance.

Answer: (B)

Understanding how conditions affect when performance is due or ends is the key. A condition precedent is an event that must happen before either party has to perform. A condition subsequent is an event that, once it occurs, ends an existing duty to perform. So the correct description is that a condition precedent must occur before performance, while a condition subsequent ends an existing duty upon occurrence. For example, a contract to buy a car may require financing to be approved before the seller must transfer the title; financing approval is a condition precedent. A clause that the contract terminates if the car fails a safety inspection is a condition subsequent; the obligation to perform ends if the inspection fails. The idea that a condition precedent ends an existing duty would mix up the effects of these two types of conditions.

Understanding how conditions affect when performance is due or ends is the key. A condition precedent is an event that must happen before either party has to perform. A condition subsequent is an event that, once it occurs, ends an existing duty to perform. So the correct description is that a condition precedent must occur before performance, while a condition subsequent ends an existing duty upon occurrence. For example, a contract to buy a car may require financing to be approved before the seller must transfer the title; financing approval is a condition precedent. A clause that the contract terminates if the car fails a safety inspection is a condition subsequent; the obligation to perform ends if the inspection fails. The idea that a condition precedent ends an existing duty would mix up the effects of these two types of conditions.