A Michigan broker, Rachel, holds $10,000 in earnest money in her trust account. The buyer has defaulted and the seller demands the funds. The buyer sends a written release authorizing disbursement to the seller. However, Rachel discovers that the buyer is a minor who was 17 years old at the time of signing. Which of the following best describes the legal situation under Michigan law?
Correct Answer
A) The purchase agreement may be voidable by the minor buyer, and Rachel should seek legal guidance before disbursing
Under Michigan law, a contract entered into by a minor (a person under age 18) is generally voidable at the minor's election, not void. This means the minor—or the minor's legal guardian—may choose to disaffirm the contract. Because the purchase agreement's enforceability is in question due to the buyer's age, Rachel should not unilaterally disburse the earnest money without legal guidance or a court order. The minor's written release may itself be voidable, creating additional complexity that warrants legal counsel.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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