Working at a law firm that specializes in Real Estate transactions, Trusts, and Investment properties leads to many routine contracts being entered into throughout the course of business. Simply put, a contract is where one party gives up a right to another party in exchange for some of the other party’s rights. When dealing with such important matters as giving up rights, it is important to protect oneself from possible negative outcomes. An effective way to ensure the safety of both parties is to make liberal use of contingencies.
Contingencies are “dependent on or conditioned by something else” and as such provide situational protections. This is useful in contracts where all variables are not accounted for and the fulfillment of the terms may be impossible to complete. For instance, a very common contingency is a financing contingency where the buyer believes that they will be able to obtain financing for a purchase, but has yet to do so. A contingency may be written to protect the buyer stating that should they be unable to obtain financing they are not beholden to fulfill the contract.
When dealing with contracts and contingencies, it is important to note that they are not to be used as a get out of jail free card, but rather protection for when circumstances outside the control of the parties arise. A contract with contingencies usually sets forth terms that should the circumstances expected or hoped for by the contracting parties be met or fulfilled, the contract will most likely be unaffected. Occasionally a party may try to use contingencies for less than noble reasons, but if pursued, a judge will most likely look to the intentions and reliances of the parties.
How do I add a contingency to my contract and when is it necessary? To add a contingency, simply write the terms you wish to abide by and present them to the other party. If the other party accepts the contingency, then it will be part of the contract. This can be done either with the initial contract or after the contract is in effect as an addition to the contract. Many contingencies are fairly standard in purchase and sale contracts like financing and inspections, however some less common contingencies may also be contracted for. As with any aspect of a contract, there must always be consideration when rights are being given away, as compromise is the framework upon which all legal contracts must be grounded.
 For instance, the rights to a piece of land.
 For instance, the rights to a sum of money.
 Like losing your money to a crook.
 Not a literal Jail, more a release of obligation from duties one is beholden to perform.
 What does it look like the parties meant to do? Although some very bizarre determinations about intent have been made by judges.
 If it is clear that a party relied under reasonable assumptions about the contract, depending on other circumstances, the law will often protect parties from dishonest and unscrupulous use of contingencies.
 Because arguably you want to pay nothing and get my stuff, and I want to get as much money as I can from you while keeping as much of my stuff as I can.