Conditions of a contract can be categorized by two methods: the effect on the duty to perform and the way in which they were created.
Conditions that are based on their effect on the duty to perform are:
- Condition precedent: If the condition occurs, then an action must be fulfilled. If the condition does not occur, then no action is required.
- Concurrent conditions: Both parties must fulfill their responsibilities of the contract at the same time, and each performance is conditioned on the other party’s performance.
- Condition subsequent: A future, uncertain event that releases a party from their responsibilities under the contract.
Conditions of a contract that are based on the way they were created include:
- Express condition: The condition is specifically stated in the language of the contract. Courts take these types of conditions very seriously.
- Implied-in-fact condition: The condition is implied by the contract. Ex: If the condition is that Party A will unload cargo from a ship, it is implied that the ship will arrive in the port.
- Constructive conditions: These conditions are imposed by law rather than by the contract.