A buyer's financing condition states 'subject to obtaining financing of $400,000 at 5.5% interest.' The buyer obtains approval for $400,000 at 6.2% interest. What are the buyer's options?
Correct Answer
A) The buyer can reject the financing as it doesn't meet the condition
A condition is satisfied only on its own terms. Approval at 6.2% does not meet a condition that calls for financing at 5.5%, so the condition is unfulfilled and the buyer may decline that financing and treat the condition as not met. The buyer could also choose to waive the condition and proceed, in the way the contract provides.
Why This Is the Correct Answer
The approval at 6.2% does not match the 5.5% rate the condition requires, so the condition is not met. The buyer, for whose benefit the condition was written, can reject that financing. The buyer may alternatively accept it by waiving the condition.
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