A contract that one or more parties must perform only under certain conditions?

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

Answer: (A)

A conditional contract is defined by obligations that arise only if a specific event or condition occurs. In this type of agreement, one or both parties must perform only if that condition is satisfied, often described as a condition precedent or condition subsequent. For example, a sale might occur only if financing is approved or if an inspection passes. If the condition isn’t met, there’s no obligation to perform.

The other terms refer to remedies or doctrines, not to the nature of the contract. Compensatory damages are payments awarded to cover losses, extracontractual damages arise from non-contractual claims, and mitigation of damages is the duty to lessen losses after a breach.