Alice signs a contract with Bob to buy Bob's house for $150,000,with the clause,"if I am able to obtain a mortgage loan for $125,000,at no more than 7% interest,payable over 15 years." Assume that Alice tries but is unable to obtain the described loan,and therefore refuses to proceed with the purchase.Alice is in breach of the contract.

Question

Quizplus · Accepted Answer

The clause in the contract stating "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years" is a condition precedent. This means that Alice's obligation to buy the house is only triggered if she is able to obtain the specified loan. If Alice is unable to obtain the loan, she is not in breach of the contract because the condition precedent was not met.

Alice Signs a Contract with Bob to Buy Bob's House