A Missouri purchase agreement contains a financing contingency stating that the buyer must obtain a loan commitment within 21 days. The 21-day period expires and the buyer has not obtained financing, but neither party takes any action. Under Missouri contract law, what is the most likely outcome?
Correct Answer
A) The contract may remain in effect if neither party has elected to terminate based on the failed contingency
Under Missouri contract law, a contingency that is not timely satisfied gives the protected party (here, the buyer) the right to terminate, but does not cause automatic termination. If neither party exercises the right to terminate and both continue to perform, the contract may be treated as continuing in effect. The contingency is waivable, and inaction by both parties can be interpreted as proceeding despite the unfulfilled contingency.
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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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