A Virginia buyer's purchase contract contains a financing contingency with a deadline of October 15. On October 12, the buyer's lender verbally tells the buyer that the loan is approved. The buyer does not notify the seller or remove the contingency in writing. On October 16, the seller declares the buyer in default. Which statement best reflects the legal situation under Virginia contract principles?
Correct Answer
B) The buyer is in default because the financing contingency was not formally removed in writing before the deadline
Under Virginia contract principles, contingency waivers and removals must be made in writing to be legally effective. A verbal statement from the lender does not constitute formal removal of the financing contingency. Because the buyer failed to remove the contingency in writing by the October 15 deadline, the buyer has not fulfilled the procedural requirements of the contract, and the seller may have grounds to declare a default depending on the contract's specific language.
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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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