Legal Definitions - contingent demand

A contingent demand refers to a claim or request that is not absolute or immediately enforceable, but rather depends on the occurrence of a future, uncertain event or condition. Until that specific event or condition is met, the demand remains potential rather than actual.

• Example 1: Business Contract Milestone
  A construction company enters into a contract to build a new office complex. The contract specifies that the final payment of $1 million will be released to the company only after the building passes all final inspections by the city and receives its certificate of occupancy.

  Explanation: The construction company's demand for the final $1 million is a contingent demand. It is entirely dependent on the future events of the building passing inspections and receiving the certificate of occupancy. If these conditions are not met, the demand for that payment does not become enforceable.

• Example 2: Product Recall Liability
  A component manufacturer supplies parts to an automobile company. Their agreement includes a clause stating that if a defect in the supplied components leads to a mandatory vehicle recall, the automobile company can demand reimbursement for all associated recall costs.

  Explanation: The automobile company's ability to demand reimbursement for recall costs is a contingent demand. It is contingent upon the specific future event of a mandatory vehicle recall being triggered by a defect in the supplied components. Without such a recall, the demand for reimbursement does not arise.

• Example 3: Environmental Remediation
  A property developer purchases a plot of land for a new housing project. The sales agreement includes a provision that if previously undiscovered hazardous waste is found on the property during excavation, the original seller must cover all costs for its safe removal and disposal.

  Explanation: The property developer's right to demand cleanup costs from the seller is a contingent demand. It is entirely dependent on the future event of previously undiscovered hazardous waste being found during excavation. Until that condition is met, the demand for remediation funding is not active.