Ontario Mortgage Agent Practice Exam

What is a clause in a contract that describes an event that must occur before the contract can be performed?

1. Condition Precedent

2. Condition Subsequent

3. Discharge by Right

4. Mistake

The correct answer is: Condition Precedent

A" Conditions precedent" is a clause in a contract that describes an event that must occur before the contract can be performed. The other options do not accurately describe this type of clause. Option B, "Condition Subsequent," refers to a clause that outlines an event that will terminate the contract. Option C, " Discharge by Right," refers to a clause that allows for the termination of a contract due to a specific circumstance such as bankruptcy or impossibility of performance. Option D, "Mistake," refers to a clause that allows for the rescission of a contract if both parties were mistaken about a material fact at the time the contract was formed. Therefore, options B, C, and D are not the correct answers. Only option A accurately describes a clause that outlines an event that must occur before the contract can be performed.