Differentiate the immediate practical effect on performance obligations when a 'condition precedent' fails to occur versus when a 'condition subsequent' is triggered in an active agreement.

When a condition precedent fails to occur, the immediate practical effect on performance obligations is that the specific obligation dependent upon that condition never becomes active or enforceable. A condition precedent is an event or action that must take place before a contractual duty is due. If this prerequisite event does not happen, the party whose obligation is made conditional by it is not required to perform, as the duty itself has not yet matured. For example, if a contract to purchase land is contingent upon the buyer obtaining a specific zoning variance, and the buyer fails to secure that variance, the buyer's obligation to purchase the land and the seller's obligation to sell it do not become active. Neither party is bound to proceed with the transaction.
Conversely, when a condition subsequent is triggered in an active agreement, the immediate practical effect on performance obligations is that an existing and active obligation is terminated or discharged. A condition subsequent is an event or action that, if it occurs, extinguishes a previously existing contractual duty. The duty was active and enforceable prior to the event, but its occurrence brings that duty to an end. For instance, consider an employment contract stating that employment will terminate if an employee fails a mandatory security clearance re-evaluation. If the employee initially passes the clearance and begins work (activating the employment obligation), but later fails a re-evaluation, that failure is the condition subsequent. Its occurrence immediately terminates the employer's obligation to continue employing the individual and the employee's obligation to continue working.
The fundamental differentiation lies in when the obligation's status changes. With a failed condition precedent, the obligation never truly materializes; it remains a potential duty that never activates. With a triggered condition subsequent, the obligation has already materialized and been active, but its existence is cut short and it ceases to be enforceable.