What does a condition subsequent refer to in a contract?

A condition subsequent refers to an event or circumstance that can terminate an existing obligation under a contract. When such a condition occurs, it can release one or both parties from their contractual duties that were previously established, effectively ending the obligations that existed prior to that condition.

In the context of contracts, this condition acts as a sort of safety valve, providing an escape from the duties originally agreed upon if a specific event takes place after the contract is formed. For example, in an insurance contract, if a particular event happens—like the policyholder committing a fraud—that could trigger the termination of obligations on the part of the insurer.

The other options describe different aspects of contractual relationships but do not accurately define a condition subsequent. An event that triggers the obligation to perform relates more closely to a condition precedent, which is an event that must occur before a party is obligated to act. Modifying contract terms refers to amendments rather than conditions that affect the status of existing obligations. Lastly, mentioning intrinsic parts of contract negotiations does not pertain directly to conditions that either compel or terminate obligations within the contract after it is in effect.