After an assignment of a purchase contract, the original buyer's friend closes on the property instead. If the friend fails to pay, can the seller pursue the original buyer?
Correct Answer
A) Yes, because assignment transfers rights but the original buyer may remain liable unless a novation occurs
Assignment transfers rights, but the original party may remain liable for the obligations unless all parties agree to a novation releasing the original obligor.
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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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