Question

Evans bought a vineyard from Ray Wines, Inc. Evans made a 30 percent down payment and agreed to assume the mortgage debt. Evans, however, failed to pay on the debt. Acadia National Bank, which held the mortgage, sued Evans. Which of the following is most correct?

A. Acadia National was not a signatory to the assumption agreement; hence, it must foreclose on the property, since the property remains subject to the mortgage.

B. As a third-party beneficiary of the assumption agreement, Acadia National may enforce Evans's contract to assume the debt.

C. The assumption agreement between Evans and Ray Wines relieved Ray Wines of all personal liability for the debt, transferring that liability to Evans.

D. Acadia National was not a party to the assumption agreement between Evans and Ray Wines and has no right to sue Evans.

Answer 1

Option B is most correct because Acadia National Bank, as the holder of the mortgage, is a third-party beneficiary and can enforce the assumption agreement that Evans made to assume the debt. This legal concept allows parties who benefit from a contract, even if not signatories, to enforce it in certain situations.

Step-by-step explanation:

The student has asked which of the following statements is most correct regarding Evans buying a vineyard and failing to pay the mortgage debt, leading to Acadia National Bank suing Evans. It appears that Acadia National Bank is seeking to enforce the agreement that Evans made to assume the mortgage debt. This situation touches upon issues of contract law, specifically third-party beneficiary rights.

When Evans agreed to assume the mortgage debt from Ray Wines, Inc., there likely was an assumption agreement that laid out the transfer of liability from Ray Wines to Evans. In contract law, entities that are not part of the original agreement, like Acadia National Bank, can sometimes be considered third-party beneficiaries, allowing them to enforce agreements made between other parties if the contract was intended for their benefit.

Option B: Third-Party Beneficiary Rights

Given the information, Option B is the most correct. Acadia National Bank, as the holder of the mortgage, is a third-party beneficiary of the assumption agreement between Evans and Ray Wines. Even if the bank wasn't a signatory on the assumption agreement, it still has the right to enforce the contract as it stands to benefit directly from Evans's promise to pay the assumed debt. Therefore, Acadia National Bank can take legal action against Evans to enforce the agreement.