A Missouri purchase agreement contains a provision that the sale is contingent upon the buyer selling their current home within 45 days. The seller has a 'kick-out clause' allowing the seller to continue marketing the property and accept another offer, giving the original buyer 72 hours to remove the home-sale contingency or be released from the contract. A second buyer submits a full-price offer on day 30. The seller invokes the kick-out clause and notifies the original buyer. The original buyer does not respond within 72 hours. What is the most likely outcome under Missouri contract law?
Correct Answer
D) The original contract is released and the seller may proceed with the second buyer's offer
Under Missouri contract law, kick-out clauses (also called release clauses or first-right-of-refusal provisions) are enforceable. When properly invoked, the kick-out clause gives the original buyer a specified time (here, 72 hours) to remove the contingency and proceed with the purchase. If the original buyer fails to respond within the 72-hour window, the original contract is released, and the seller is free to enter into a contract with the second buyer. The original buyer's failure to act within the contractual timeframe terminates their right to purchase.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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.
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