Question

Business enterprise Company agrees to sell a commercial office building and parking garage to City Investments, Inc., which assigns the rights to the realty to Downtown Properties, LLC. Downtown Properties does not yet exist, but once it is created and comes into existence, the contract on novation will most likely be?

1) quasi
2) voidable
3) void
4) enforceable

Answer 1

Upon the creation and proper formation of Downtown Properties, LLC, and with the agreement of all parties, the contract upon novation would likely become enforceable.

Step-by-step explanation:

When a contract is assigned to an entity that does not exist yet, like Downtown Properties, LLC, in the scenario presented, the enforceability of the contract upon the entity's creation depends on several legal factors. In the case of novation, where a new entity assumes the obligations of a contract, the contract may become enforceable once the entity is properly formed and all parties agree to the novation.

Novation requires all parties, including the new entity, to agree to the new terms and to release the old party from obligations. If these conditions are met, the contract is typically considered valid and the assumption of the rights and duties under the contract can take place.