Which of the following statements is the best description of a condition?

• A. A term in a contract which provides that the contract will terminate on the happening of a particular event.
• B. A term in a contract, the consequences of breach of which cannot be determined until after the breach has occurred and the seriousness of the effects of the breach can be ascertained.
• C. A term which must be satisfied before a contract can come into existence.
• D. A term in a contract, nonperformance of which may result in rescission of the contract and/or damage to the plaintiff.

Answer: (C)

In contract law, a condition is a term whose fulfillment is required for the contract to become binding. This is the idea of a condition precedent: the contract does not come into existence until that condition is satisfied. The statement that best fits this describes a term that must be satisfied before the contract can come into existence, so it’s the correct description of a condition.

The other statements describe different concepts. A term that causes the contract to terminate when a certain event happens is a condition subsequent, not a condition for formation. A term whose breach’s consequences can’t be determined until after the breach occurs speaks to post-breach remedies rather than what creates the contract. A term where nonperformance may lead to rescission or damages relates to remedies after breach, not to a formation condition.