What Is a Conditional Contract in Construction

Construction contracts can be complex and include various types of agreements. One of the most common types of construction contracts is known as a conditional contract. This type of contract is used to define a specific set of conditions that must be met before a construction project can move forward or be completed.

So, what exactly is a conditional contract in construction? Let’s explore this concept in more detail.

A conditional contract is a type of agreement that outlines specific conditions that must be met before the project can proceed. This includes conditions related to financing, permits, or other requirements that must be met before the project can begin or continue.

The conditions set forth in a conditional contract are typically known as “precedent conditions.” These are conditions that must be met in order for the contract to be valid and enforceable. If the conditions are not met, the contract may be terminated without any further obligations or penalties.

Some common examples of precedent conditions in construction contracts include obtaining necessary permits and approvals, securing financing, and completing necessary site inspections. These conditions are often outlined in detail in the contract, including specific deadlines or timelines for completion.

Conditional contracts are often used in construction projects that may have a higher degree of risk or uncertainty. By including specific conditions in the contract, both parties can better manage risk and ensure that the project moves forward smoothly.

It’s important to note that conditional contracts are not the same as contingency contracts. Contingency contracts are agreements that include specific provisions for unforeseen events or circumstances. In contrast, conditional contracts are focused on specific conditions that must be met before the project can proceed.

In summary, a conditional contract is a type of construction agreement that outlines specific conditions that must be met before the project can proceed. These conditions are known as precedent conditions and are often related to financing, permits, or other requirements. By including these conditions in the contract, both parties can better manage risk and ensure that the project moves forward smoothly.

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