A Connecticut buyer's agent is drafting a purchase offer for a property in Middletown that the buyer plans to convert into a daycare center. The property is currently zoned residential. The agent recommends including a contingency that would allow the buyer to terminate if the town does not approve a change of use. The seller's agent objects, claiming such a contingency makes the contract illusory because approval is entirely within the buyer's control. Which statement best describes the legal validity of this contingency under Connecticut law?
Correct Answer
A) The contingency is valid and enforceable because the approval decision rests with the municipality, not the buyer, and the buyer has an implied duty to make good-faith efforts to obtain approval
A zoning or change-of-use contingency is a legitimate and enforceable contingency type in Connecticut real estate contracts. The contingency is not illusory because the ultimate approval decision rests with the municipality — a third party — not the buyer. Under Connecticut contract law, the buyer has an implied covenant of good faith and fair dealing, which requires making a bona fide application and reasonable efforts to obtain approval. The seller's agent's argument that the contingency is illusory because the buyer 'controls' whether to apply misunderstands the doctrine — the buyer cannot simply choose not to apply and then invoke the contingency to escape the contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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