Conditional Contract Provision
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A Conditional Contract Provision is a contract provision that is a conditional statement (specifies rights, obligations, or terms that only take effect when certain specified triggering conditions or prerequisites are met).
- Context:
- It can (typically) contain an if-then structure linking a condition precedent to a contractual consequence.
- It can (often) include temporal conditions based on specific dates, events, or durations.
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- It can range from being a Simple Conditional Provision with a single trigger to being a Complex Conditional Provision with multiple conditions.
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- It can be based on Performance Conditions, financial conditions, regulatory conditions, or external event conditions.
- It can include Condition Precedents that must occur before obligations arise.
- It can specify Condition Subsequents that may terminate or modify existing obligations.
- It can contain Nested Conditions where secondary conditions apply only after primary conditions are met.
- It can define Condition Monitoring requirements to verify when conditions are satisfied.
- It can establish Notice Requirements for when conditions are met or failed.
- It can establish Contractual Relationships, such as:
- Override versus Default Relationships where a default provision applies unless specific conditions trigger an override provision.
- Sequential Dependency Relationships where the fulfillment of one condition triggers the applicability of subsequent conditions.
- Mutual Exclusivity Relationships where different conditions lead to mutually exclusive contractual outcomes.
- Cascade Relationships where meeting a condition triggers a series of interconnected contractual effects.
- Hierarchical Priority Relationships where multiple conditions are ranked in order of precedence.
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- Example(s):
- a Conditional Payment Provision: "
If annual revenue exceeds $1 million, the Contractor shall receive a bonus payment of 5% of revenue above this threshold." - a Conditional License Grant: "
Upon receipt of the license fee, Licensor grants to Licensee a non-exclusive right to use the Software." - a Conditional Assignment Provision: "
Subject to Landlord's prior written consent, Tenant may assign this lease to a qualified assignee." - a Conditional Termination Right: "
If Supplier fails to meet the service levels for three consecutive months, Customer may terminate this agreement upon 30 days' written notice." - ...
- a Conditional Payment Provision: "
- Counter-Example(s):
- an Unconditional Contract Provision, which applies without any prerequisites or conditions.
- a Contract Definition, which states meanings rather than conditional obligations.
- a Declaratory Provision, which makes statements of fact without conditional elements.
- See: Condition Precedent, Contractual Trigger, Conditional Obligation, Contract Conditionality