A contingency in a purchase agreement is not satisfied by its deadline. The party the contingency protects may:
Correct Answer
A) Cancel the contract and recover the deposit without being in breach
A contingency is a condition the parties write into an otherwise valid contract. While the deadline runs, the contract is binding and executory; if the condition fails, the party it protects is excused from performing and may cancel and take the deposit back, because the contract itself gave that right. Nobody has breached when a condition simply fails, so the remedies that follow a default do not come into play. The agreement was fully valid up to the moment of cancellation.
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Related Topics & Key Terms
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Key Terms:
Related Concepts
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
More Contracts Questions
Which of the following is required for a valid contract in California?
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A contract formed for an illegal purpose is considered:
After a residential purchase contract has been signed by both parties in Illinois, the buyer and seller verbally agree to change the closing date. What is the legally sound way to document this change?
Specific performance in North Dakota:
- → In a contract for deed (land contract), who retains legal title to the property until the purchase price is fully paid?
- → Which of the following is NOT required for a valid bill of sale?
- → A Nevada real estate salesperson is helping a buyer draft a purchase agreement. Which of the following is NOT a required element for a Nevada residential purchase agreement to be legally enforceable?
- → Sawyer Iverson is reviewing an Illinois issue in Joliet. The person assumes that attorney review automatically replaces every inspection, appraisal, or financing deadline in a standard Illinois residential contract. Which statement best applies?
- → Tom and Linda sign a purchase agreement for a home in Hartford, Connecticut. The agreement includes a financing contingency stating that if Tom cannot obtain a mortgage commitment within 21 days, either party may void the contract. On day 19, Tom's lender issues a written mortgage commitment. On day 22, Tom changes his mind and tries to void the contract by claiming the financing contingency was not satisfied. Which of the following best describes the legal status of the contract?
- → Avery Jenkins is reviewing an Illinois issue in Normal. The person asks what happens if neither attorney sends a disapproval or proposed change during the standard review period. Which statement best applies?
- → Under Montana law, a purchase agreement for residential real property becomes legally binding on the seller when which of the following occurs?
- → Johnny wants the seller's patio furniture included in his purchase of a house. Before the offer is signed and delivered to the seller, he asks his agent to attach a page covering the furniture to the offer. That attached page is best described as:
- → A bilateral contract in real estate is best described as:
- → A contract where one party uses threats to force the other party to sign is considered:
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