Contingency clause:
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A contingency clause is a provision in a contract that makes the completion of the contract dependent upon the occurrence of a specific event. It essentially allows the parties to back out of the contract if certain conditions are not met.
In the context of a real estate sales contract, a contingency clause is typically included to protect the buyer. It may specify that the sale is conditional upon the buyer obtaining financing, conducting a property inspection, or obtaining expert advice. If any of these conditions are not met, the buyer can typically back out of the contract without penalty.
For example, if the buyer is unable to obtain financing, they would not be obligated to proceed with the sale. Similarly, if a property inspection reveals significant issues with the property, the buyer may choose to back out of the sale or negotiate a lower price.
Overall, a contingency clause is an important protection for buyers, as it allows them to back out of a contract if certain conditions are not met. It is typically included in real estate sales contracts but may also be included in other types of contracts where certain conditions must be met before the contract can be completed.