Final answer:
Smith and Baker's contract to buy and sell a home becomes voidable at the buyer's option if the home is destroyed before completion of the contract. The buyer or seller may terminate the agreement with written notice, or the contract could potentially be adjusted if possession is still possible at a later date.
Step-by-step explanation:
If Smith and Baker executed a valid contract for the sale of a home and the home burns down before the completion of the contract, the legal principle of impossibility of performance might come into play. According to the information provided, either the buyer or the seller has the option to cancel and terminate the contract upon written notice if the residence is lost or destroyed. In this scenario, the contract becomes voidable at the discretion of the affected party, which is generally the buyer, since they can no longer obtain the benefit for which they entered into the contract.
If neither party chooses to cancel the agreement, the contract may be adjusted to commence on the actual date of possession if possession can still be delivered despite the destruction. However, if the property has been completely destroyed, the buyer is typically not obligated to go through with the purchase, suggesting that the correct answer is that the contract is voidable at the buyer's option (Option C).