Ontario Mortgage Agent Practice Exam

What is a condition precedent in a contract?

1. Condition Subsequent

2. Mistake

3. Condition Precedent

4. Acceptance

The correct answer is: Condition Precedent

A condition precedent is a clause in a contract that outlines a specific event or action that must occur before the contract can be enforced or valid. Option A, a condition subsequent, is a clause that outlines an event that will terminate the contract if it occurs. Option B, a mistake, refers to an error or misunderstanding made by one or both parties in the terms of the contract. Option D, acceptance, is the agreement by both parties to the terms of the contract. None of these options accurately define what a condition precedent is, making option C the best answer.