Contingency Contract Template for Canada

A Contingency Contract sets up an agreement that only takes effect when specific conditions are met. For example, a real estate deal might only proceed if the buyer secures financing, or a construction project might only start after obtaining municipal permits. These agreements are common in Canadian business transactions where timing and circumstances matter.

Under Canadian contract law, these agreements protect both parties by clearly spelling out what needs to happen before obligations kick in. They're especially useful in complex business deals, mergers and acquisitions, and situations where multiple steps need to fall into place. The key is making sure all conditions are specific, measurable, and have reasonable timeframes for completion.

Use a Contingency Contract when you need to create binding agreements that depend on future events. This powerful tool helps protect your interests in situations like business acquisitions where you'll only proceed if due diligence reveals clean financials, or construction projects that require specific permits before breaking ground.

Canadian businesses often rely on these contracts for real estate transactions, corporate mergers, and joint ventures where timing and conditions are critical. They're particularly valuable when dealing with complex multi-step deals, uncertain regulatory approvals, or performance-based agreements. Including clear, measurable conditions helps prevent disputes and ensures everyone understands exactly what must happen before the contract becomes active.

• Performance-Based Contingencies: Set milestones or targets that must be achieved before the contract activates, commonly used in sales agreements or bonus structures
• Regulatory Contingencies: Link contract execution to specific permit approvals, zoning changes, or licensing requirements under Canadian law
• Financial Contingencies: Make agreements dependent on securing funding, maintaining credit ratings, or meeting specific financial metrics
• Due Diligence Contingencies: Allow parties to proceed only after satisfactory completion of investigations, audits, or inspections
• Time-Based Contingencies: Specify deadlines or timing requirements that must be met for the contract to take effect

• Business Owners: Use Contingency Contracts to protect their interests when making major transactions or investments dependent on specific conditions
• Real Estate Professionals: Create agreements that account for financing, inspections, and property condition requirements
• Corporate Lawyers: Draft and review the contracts to ensure legal compliance and protect their clients' interests
• Construction Companies: Establish project agreements contingent on permits, financing, or material availability
• Financial Institutions: Set up lending agreements based on specific financial or performance metrics being met

• Define Conditions: List all specific events or requirements that must occur before the contract takes effect
• Gather Party Details: Collect full legal names, addresses, and signing authority for all involved parties
• Set Timelines: Establish clear deadlines for when conditions must be met and the agreement expires
• Document Evidence: Specify how completion of conditions will be proven and verified
• Draft Clear Terms: Use our platform to generate precise, legally sound language for each contingency
• Review Mechanics: Outline the process for confirming conditions are met and next steps

• Party Information: Full legal names, addresses, and contact details of all involved parties
• Contingency Terms: Clear description of conditions that must be met, with specific metrics or requirements
• Time Limits: Deadlines for meeting conditions and contract expiration dates
• Performance Criteria: Detailed standards for evaluating when conditions are satisfied
• Verification Process: Steps to confirm and document when conditions are met
• Governing Law: Specification that Canadian law applies and which province has jurisdiction
• Termination Rights: Circumstances where parties can end the agreement if conditions aren't met

A Contingency Contract differs significantly from a Contract to Sell in several key ways. While both involve future transactions, their fundamental structures and purposes serve different needs in Canadian business law.

• Activation Timing: Contingency Contracts only become active when specific conditions are met, while Contracts to Sell are immediately binding with a set future transfer date
• Risk Distribution: Contingency Contracts spread risk by making obligations conditional, whereas Contracts to Sell create firm commitments regardless of future circumstances
• Performance Requirements: In Contingency Contracts, parties must satisfy specific conditions before the agreement takes effect; Contracts to Sell focus on the final transfer of goods or property
• Exit Options: Contingency Contracts typically terminate if conditions aren't met, while Contracts to Sell usually require breach remedies for termination