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In an earlier question, I asked about the "condition precedent" of an investor investing money in a company being the investor's being shown a demonstration of the company's new product to the investor's reasonable satisfaction.

Supposed the contract read, "The investor will invest, provided that he has been given a demonstration of the product that meets his reasonable satisfaction." Is that the same as, or equivalent to the demo being a "condition precedent" for the investment?

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  • I can't imagine having that in a contract at all... An investor would sign an NDA, then be given a demo of whatever-5000. If the investor wants to invest, they would issue a LOI or some other contract outlining the terms. The sentence as written really doesn't mean anything because the investor can always say "I'm not satisfied" and walk away, there are no real-world metrics there other than somebodies feelings.
    – Ron Beyer
    Sep 1 '20 at 20:51
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Since it is a term of a contract, it is not a condition precedent to a contract.

However, it is a condition precedent to an obligation under a contract. The obligation on the investor to invest does not crystalise unless and until the demonstration occurs. Such obligations are usually called contingent liabilities.

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It is often not possible to determine on the face of the contractual language whether a term is a condition precedent, or some other kind of contractual term, such as a promise. There is a canon of statutory interpretation that provides that unless there is no doubt otherwise, that contract terms are promises rather than conditions precedent.

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