Question

Archie and Bert mutually agree to terminate a contract. The buyer, Bert, asks for the earnest money back and the seller, Archie, consents. This is an example of

Answer 1

Archie and Bert mutually agreeing to terminate a contract and return the earnest money represents mutual rescission, where both parties release each other from their contractual obligations and restore the original state of affairs.

Step-by-step explanation:

When Archie and Bert mutually agree to terminate a contract, and Bert, the buyer, asks for his earnest money back — which Archie the seller, agrees to — this is an example of mutual rescission. Earnest money is generally a deposit made to a seller showing the buyer's good faith in a transaction and mutual rescission is when both parties agree to discharge each other from the obligations of a contract.

In this case, Archie consenting to return the earnest money is part of the mutual agreement to restore each other to their original positions prior to the contract.