A contract that binds parties only if certain conditions occur is called?

• A. Compensatory damages
• B. Injunction
• C. Conditional contract
• D. Mitigation of damages

Answer: (C)

A contract binds parties only if certain conditions occur is a conditional contract. In a conditional contract, the parties’ obligations don’t attach until a specified event happens (or fails to happen). If the condition is met, performance becomes required; if not, there’s no binding obligation. For example, a real estate deal that depends on the buyer securing financing is contingent: if financing is approved, the contract binds both sides; if financing falls through, the contract isn’t enforceable. This can involve conditions precedent (the obligation arises only after the condition is satisfied) or conditions subsequent (the obligation ends if the condition occurs).

This is different from remedies or principles such as compensatory damages (a damages remedy), an injunction (a court order), or mitigation of damages (a duty to reduce losses), which are not contract types.