Condition

From the Latin Latin: condicio, meaning 'agreement' or 'stipulation.'.

In one sentence

An event that must happen (or not happen) for a contract obligation to take effect.

Plain English

A condition is a requirement that must be met before a party's duty under a contract kicks in. For example, a condition might be that a house inspection passes, or that financing is approved. If the condition doesn't occur, the party waiting for it is often released from their obligation. Conditions are different from covenants because they're about whether an obligation arises at all, not just about performing it.

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Example

A home purchase contract includes a condition that the buyer's mortgage application must be approved by a certain date. If the bank denies the loan, the buyer can walk away without penalty, because the condition wasn't satisfied.

Used in a sentence

“The insurance policy would only pay out on the condition that the claim was filed within 30 days of the loss.”

Related terms

Concurrent Conditions

Contract obligations that must be performed at the same time by both parties.

Material Fact

A fact that significantly affects a party's rights, obligations, or decision-making in a contract.

Perfect Tender Rule

A seller must deliver goods that exactly match the contract terms or the buyer may reject them.

Course of Performance

How the parties have actually carried out the contract in practice, which can clarify ambiguous terms.

Covenant

A binding promise in a contract to do or not do something.

Consideration

Something of value exchanged by each party to make a contract binding.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.