Question 1

What's the difference between a contingency and a condition precedent?

Accepted Answer

They're closely related. A contingency is the broader concept — a future uncertain event that affects the contract. A condition precedent is the legal mechanism — a specific requirement that must be met before an obligation activates. Most contingencies are structured as conditions precedent, but the terms aren't perfectly interchangeable.

Question 2

Can I add contingencies to any contract?

Accepted Answer

You can negotiate them into any contract, but the other party has to agree. Adding a contingency shifts risk: you get an exit if things don't go as planned, but the other party gets less certainty. Expect to give something up in return — a higher price, shorter contingency period, or non-refundable deposit.

Question 3

What happens if a contingency isn't met?

Accepted Answer

Typically, the affected party can walk away from the contract without penalty. A financing contingency that isn't met lets the buyer cancel and recover their deposit. But check the contract: some contingencies require specific notice procedures or have deadlines. Miss the deadline and you might lose the right to exit.

Question 4

What happens if I waive a contingency?

Accepted Answer

You give up your right to exit the contract based on that condition. Waiving a financing contingency in a real estate deal means you're buying the property whether or not your loan comes through. Sellers love waived contingencies (more certainty), and buyers sometimes waive them to make their offer more competitive. It's risky.

Question 5

How long do contingencies last?

Accepted Answer

As long as the contract specifies. Inspection contingencies typically run 7–14 days. Financing contingencies run 30–60 days. There's no standard — it depends on what's reasonable for the type of contingency. Set realistic timeframes: too short and you can't complete your due diligence; too long and the other party might walk.

Contingency

Definition

In Practice

Common in these contract types

Related terms

Frequently asked questions about contingency

Create a contract with proper contingency clauses