Condition Precedent Clauses

Summary

This practice note looks at the purpose and types of condition precedent clauses wherein contractual obligations are made conditionally or "subject to" some event. This practice note discusses how these clauses are interpreted, including how to determine whether a clause is a "true" condition precedent, how imprecise language in a condition precedent clause can be interpreted in order to avoid finding the contract void for uncertainty, and how the courts interpret condition precedent clauses to avoid giving one party the unilateral power to end a contract by dividing them into three separate classes, depending on whether they were subjective, objective or a hybrid. In preparing any condition precedent clause, consideration should be given to (i) who is responsible for discharging the condition; (ii) by when must the condition be discharged (i.e., a "drop dead" date); and (iii) which party, if any, may be entitled to waive the condition (i.e., typically the beneficiary of the ...