Humber/Ontario Real Estate Course 4 Exam Practice

When drafting an Agreement of Purchase and Sale, which clause assumes a binding commitment only with fulfillment?

1. Condition precedent

2. Escape clause

3. Waiver clause

4. Conditional offer clause

5. Binding obligation clause

6. Fulfillment condition

The correct answer is: Condition precedent

The correct answer highlights the role of a condition precedent in real estate transactions. This clause specifies that certain conditions must be met for the agreement to become legally binding. Essentially, a condition precedent is an initial stipulation that must be satisfied, and until those conditions are fulfilled, the parties are not obligated to proceed with the agreement. This allows for due diligence, ensuring that both buyer and seller have a chance to meet necessary requirements before entering into a binding contract. In contrast, an escape clause typically allows one party to withdraw from the agreement under specific circumstances, but it doesn't bind the parties dependent on fulfillment. A waiver clause involves relinquishing a right or claim, while the conditional offer clause relates to making an offer contingent on certain criteria being met, but it does not carry the same weight as a condition precedent. The binding obligation clause implies a commitment exists without regard to specific conditions, and the fulfillment condition is not a standard term used in this context. Therefore, the best fit for the requirement of binding commitment contingent on the fulfillment of conditions is the condition precedent clause.