Question

Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years." Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.

a. true
b. false

Answer 1

Alice is not in breach of the contract because she was unable to obtain the described loan. The correct option is

b. false

Step-by-step explanation:

B) False. Alice is not in breach of the contract. The condition set by Alice in the contract was that she would proceed with the purchase only if she is able to obtain a mortgage loan for $125,000 at a maximum interest rate of 7% payable over 15 years. Since Alice was unable to obtain the described loan, she is not obligated to proceed with the purchase. A breach of contract occurs when one party fails to perform their obligations as defined in the contract, but in this case, Alice's inability to obtain the loan is a legitimate reason for not going forward with the purchase.

The correct option is b. false