A North Dakota purchase agreement for a property in Cass County includes a clause stating: 'This sale is contingent upon the buyer's current home at 123 Main Street, Fargo, ND selling and closing within 60 days.' After 45 days, the buyer's home has not sold. The seller receives a second offer from another buyer and wants to accept it. The seller's agent sends the original buyer written notice of the new offer and gives the original buyer 72 hours to waive the home-sale contingency or the contract will terminate. Which statement best describes this situation under North Dakota contract law?
Correct Answer
D) The seller may use a kick-out clause to give the original buyer the option to waive the contingency, and if the buyer fails to waive, the seller may terminate and accept the second offer
The scenario describes a 'kick-out clause' (also called a release clause or first right of refusal clause), which is a common provision in North Dakota purchase agreements with home-sale contingencies. A kick-out clause allows the seller to continue marketing the property and, upon receiving a bona fide second offer, to notify the original buyer and give them a specified period (here, 72 hours) to waive the contingency and proceed. If the original buyer fails to waive the contingency within the notice period, the seller may terminate the original contract and accept the new offer. This is a recognized and enforceable contractual mechanism under North Dakota contract law.
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Related Topics & Key Terms
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Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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