Ontario Mortgage Agent Practice Exam

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What describes a clause in a contract that states a future event that can cancel the contract?

Acceptance
Condition Subsequent
Discharge by Right
Material Alterations

The correct answer is: Condition Subsequent

A clause in a contract that states a future event that can cancel the contract is known as a condition subsequent. Acceptance (Option A) refers to a party's final and unqualified acceptance of an offer. Discharge by Right (Option C) involves the termination of a contract due to a legal rule or statute. Material Alterations (Option D) refer to changes made to a contract that are significant enough to affect the overall agreement. These options are incorrect because they do not specifically address the scenario described in the question. Only option B, condition subsequent, accurately describes a clause that can cancel a contract based on a future event.