Contracts
A contingency clause in a purchase agreement that states 'this offer is contingent upon the buyer obtaining a mortgage at no more than 7% interest' is an example of:
AA condition precedent✓ Correct
BA condition subsequent
CAn escape clause
DA time-is-of-the-essence clause
Explanation
A condition precedent is a condition that must be satisfied before the contract becomes binding or before a party is obligated to perform. The financing contingency must be met before the buyer is obligated to complete the purchase.
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