Question

Lou sells a property to Bud under an oral agreement for 100,000. Bud pays Lou 50,000 and agrees to pay 25,000 each year for two years. Bud makes substantial improvements to the property and makes the first payment on time. One month before the final 25,000 payment is due, Lou declares the contract void. In this case, which of the following statements is CORRECT?

1) The contract can be voided as long as it is done before the last payment is made
2) The contract can be voided because it was an oral contract
3) The contract cannot be voided because the statute of limitations had expired
4) The contract cannot be voided due to the actions of the parties over time

Answer 1

The contract cannot be voided due to the actions of the parties over time.

Step-by-step explanation:

The correct statement in this case is: 4) The contract cannot be voided due to the actions of the parties over time.

There are several reasons why this statement is correct. First, the fact that the contract was an oral agreement does not automatically make it void. Oral contracts can be legally binding and enforceable as long as they meet certain requirements, such as the parties agreeing on the essential terms. Second, the statute of limitations is a time limit for bringing a legal claim, but it does not affect the ability to void a contract. The contract can still be voided if there are valid reasons, such as a breach of contract or fraud. Third, the actions of the parties over time, including the payment of the initial amount and the improvements made to the property by Bud, indicate that both parties intended to uphold the contract.

In this case, Lou declaring the contract void one month before the final payment is due does not automatically make the contract void. Bud may have legal recourse to enforce the contract or seek damages if Lou's actions are not justified.