Which of the following is true about contingencies in a contract?

Contingencies in a contract represent specific conditions or requirements that must be satisfied for the contract to move forward and ultimately be enforceable. When a contingency is included in a real estate contract, it acts as a safeguard for one or both parties, providing a way to back out of the agreement without penalties if certain criteria are not met.

For instance, a common contingency would be securing financing, where the buyer is only obligated to proceed with the purchase if they successfully obtain a loan. If this contingency is not fulfilled, the buyer can terminate the contract without facing consequences, thus emphasizing the critical role of contingencies in protecting the interests of the parties involved.

While contingencies are indeed essential for the progression of a contract and can be legally binding in their nature, they provide conditions that must be met or waived for the contract to be valid or enforceable. This aspect fundamentally distinguishes the correct answer, which identifies that contingencies must be fulfilled for the contract to proceed.