A Vermont seller has owned a parcel of land for five years and is selling it at a 45% gain. The buyer and seller are negotiating who will bear the Vermont Land Gains Tax obligation. The seller proposes a contract clause stating that the buyer will be solely responsible for paying the Land Gains Tax at closing. Under Vermont law, which statement most accurately describes the effect of this contractual provision?
Correct Answer
B) The clause may be enforceable between the buyer and seller as a contractual allocation of cost, but it does not eliminate the seller's primary statutory liability to the State of Vermont for the tax
Under 32 V.S.A. Chapter 236, the seller is primarily liable for the Vermont Land Gains Tax. While parties may contractually agree to allocate the economic burden of the tax between themselves, this private agreement does not extinguish the seller's underlying statutory obligation to the State of Vermont. The state can still pursue the seller for unpaid tax regardless of what the contract says. Furthermore, the statutory buyer liability provision — which allows the state to pursue the buyer if the seller fails to pay — is also not eliminated by a private contract. The contractual clause only governs the relationship between buyer and seller, not the state's enforcement rights.
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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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