Buyer Keisha makes an offer on a Murfreesboro home and includes a clause stating: 'This offer is contingent upon Keisha's personal satisfaction with the results of a home inspection to be completed within 10 days.' The seller accepts. The inspector finds only minor issues, but Keisha decides she simply no longer wants the property and invokes the inspection contingency to exit the contract. Under Tennessee law, which of the following is most accurate?
Correct Answer
B) Keisha may exit the contract under the personal satisfaction clause because such clauses are enforceable in Tennessee when exercised in good faith
Tennessee courts recognize personal satisfaction clauses in contracts as enforceable, provided the party invoking the clause does so in good faith and not as a mere pretext. When a contract explicitly conditions a buyer's obligation on personal satisfaction with an inspection, the buyer retains the right to exit if genuinely unsatisfied, even if the issues found are minor. The key is that the clause was mutually agreed upon and incorporated into the accepted contract. However, invoking such a clause in bad faith (e.g., as a pretext to exit for unrelated reasons) could be challenged.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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