A Mesa buyer's financing contingency expires at 5:00 PM on Friday. At 4:45 PM, the buyer's agent emails the seller's agent stating that loan approval is still pending and requesting a 5-day extension. The seller's agent responds at 6:30 PM agreeing to the extension. On Monday, the seller changes their mind and wants to cancel the contract, claiming the contingency expired. What is the legal status of this contract under Arizona law?
Correct Answer
A) The contract is cancelled because the original contingency deadline passed
The contract is cancelled because the original contingency deadline passed before the extension was agreed upon. In Arizona, contingency deadlines are strict, and extensions must be agreed upon before the original deadline expires. The email at 6:30 PM came after the 5:00 PM deadline. Option B is incorrect because the agreement came after the deadline had passed. Option C is incorrect because there's no dispute about the timeline - the deadline clearly passed. Option D is incorrect because agents acting within their authority can bind their principals, but the timing issue makes this irrelevant.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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