Brenda is purchasing a home in Somerset County. Her contract includes a mortgage contingency requiring a written loan commitment within 21 days. On day 20, Brenda's lender verbally confirms the loan is approved but cannot issue a written commitment until day 23 due to processing delays. Brenda does not notify the seller or request an extension. On day 22, the seller, Harold, sends written notice that the mortgage contingency has expired and declares the contract void, demanding Brenda forfeit her $20,000 deposit. Brenda argues the verbal approval satisfies the contingency. Which statement best describes the legal outcome under New Jersey law?
Correct Answer
D) Harold's position is likely correct because a verbal approval does not constitute a written loan commitment, and Brenda's failure to request an extension before the deadline likely results in contingency expiration.
Under standard New Jersey contract practice and general contract law principles, a mortgage contingency requiring a 'written loan commitment' is not satisfied by a verbal approval. The written requirement is a material term of the contingency. If Brenda did not obtain a written commitment within the 21-day period and did not request a written extension before the deadline expired, Harold is likely within his rights to declare the contingency expired and the contract void. New Jersey courts and standard contract practice place the burden on the buyer to satisfy contingencies within the stated timeframe or to timely request extensions. Brenda's failure to act — neither obtaining the written commitment nor requesting an extension — places her in a vulnerable legal position.
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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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