In a contract scenario, a contract includes a condition precedent to performance. Which statement best describes the effect of a condition precedent if not satisfied?

• A. It can discharge the obligation.
• B. It has no effect on performance.
• C. It requires a written record to be enforceable.
• D. It automatically voids the contract.

Answer: (A)

A condition precedent is something that must happen before a party’s duty to perform arises. If that event does not occur, the obligation to perform is discharged—the party is not required to perform the contract because the trigger for performance never happened. For example, a purchase agreement may require loan approval before the buyer must close; if the loan isn’t approved, the buyer isn’t obligated to buy, and the seller isn’t obligated to convey.

This doesn’t mean the entire contract is automatically voided or that performance is always unaffected. It simply excuses the specific performance tied to that condition. It also isn’t a requirement that a written record be created to enforceability; that’s not the general rule for condition precedents.