Oregon Construction Contractors (CCB) Practice Test

What must occur for performance under a contract to be required according to conditions precedent?

1. All parties must agree on the terms

2. An act or event must occur

3. The project must be funded

4. Documentation must be submitted

The correct answer is: An act or event must occur

Performance under a contract is contingent upon certain conditions being fulfilled, and this is where conditions precedent come into play. A condition precedent is an event or action that must occur before a party is obligated to perform their contractual duties. This means that until the specified act or event takes place, the contract does not become enforceable, and no obligations are triggered. For example, if a contractor is required to begin work only after obtaining all necessary permits, the issuance of these permits represents the condition precedent. Only once that condition is satisfied does the contractor's obligation to perform the work commence. The focus here is on the necessity of an external factor to activate the obligations stated within the contract. The other options refer to important elements of forming or executing a contract, but they do not specifically address the nature of conditions precedent. Agreement on terms relates to mutual consent but does not specify an event that must occur before obligations arise, funding refers to the financial aspect, and documentation may be necessary for various reasons but is not inherently linked to the concept of a condition precedent. Thus, recognizing that an act or event must occur is fundamental to understanding how contractual obligations are activated.