Condition Precedent

Dictionary Says

Definition of 'Condition Precedent'


A legal term describing a condition or event that must come to pass before a specific contract is considered in effect or any obligations are expected of either party.

There may also be condition precedents in the ongoing life of a contract, which simply state that if condition X occurs, event Y will then occur. Condition X is the condition precedent.

Investopedia Says

Investopedia explains 'Condition Precedent'


In real estate, for example, a mortgage contract will have a condition precedent that an inspection to assess the condition and value of the property must occur and be agreed to by both the buyer and the lender before the mortgage contract takes effect.


Condition precedents are also quite common in wills and trusts, where the transfer of money or property only occurs after certain stipulations are met, such as an heir being married or reaching a certain age.



comments powered by Disqus
Hot Definitions
  1. Securitization

    The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors.
  2. Economic Forecasting

    The process of attempting to predict the future condition of the economy. This involves the use of statistical models utilizing variables sometimes called indicators.
  3. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
  4. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
  5. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  6. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
Trading Center