Mercantile Limited, a corporation in Toronto, enters into an agreement with Jackson to advance $300,000 to Jackson for the purchase of farming equipment. Jackson agrees to give Mercantile Limited a mortgage over his home as security for the advance of the money. The terms of the agreement contain an appraisal provision that the commitment to make the loan is subject to an appraisal of Jackson's home of at least $350,000. The appraisal provision is known as
A) a condition term.
B) a condition precedent.
C) a warranty.
D) an implied term.
E) an appraisal warranty.

Question

Quizplus · Accepted Answer

The appraisal provision in the agreement is a condition precedent because it is a condition that must be satisfied before the commitment to make the loan becomes effective. If the appraisal is less than $350,000, the condition will not be satisfied, and there will be no obligation to make the loan.

Mercantile Limited, a Corporation in Toronto, Enters into an Agreement