A purchase agreement in Scottsbluff, Nebraska contains a financing contingency stating that the buyer must obtain a loan commitment within 21 days. On day 18, the buyer's lender denies the loan application due to the buyer's credit history. The buyer notifies the seller in writing on day 20. Under general Nebraska contract principles, what is the most likely result?
Correct Answer
B) The buyer may terminate the agreement and recover the earnest money because the financing contingency was not satisfied
A properly drafted financing contingency in a Nebraska purchase agreement allows the buyer to terminate the contract and recover the earnest money if the buyer is unable to obtain the specified financing within the contingency period. Because the buyer provided written notice of the loan denial within the 21-day period, the contingency was not satisfied through no fault of the buyer acting in good faith, and the buyer is entitled to a refund of earnest money and termination of the agreement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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