Final answer:
The clause that requires parties to a real estate contract to proceed in good faith and without undue delay is known as a good faith clause.
It ensures that each party acts with honest intent and discourages behaviors that might stall the transaction process. Such provisions maintain the integrity of the transaction and prevent potential disputes.
Step-by-step explanation:
The clause in a real estate sales contract that directs the parties to act in good faith and not unduly delay the process is often referred to as a good faith clause or a covenant to act in good faith.
Such a clause might mandate that each party will proceed with the necessary steps of the transaction, such as inspections, appraisals, and securing financing, in a timely manner and with honest intent.
The intent behind this provision is to ensure that neither party intentionally stalls the proceedings or acts in a manner that could be detrimental to the other party or to the success of the contract's overall completion.
Consider the statement 'POSSESSION: If OWNER is unable to deliver possession of the residence to RESIDENTS on the agreed date...'.
This clause addresses a specific situation where good faith could come into play, ensuring that actions or non-actions resulting in a delay of possession have certain clear outcomes as stipulated in the agreement.
These provisions are designed to maintain the integrity of the transaction and encourage a cooperative and expedient process.
They are fundamental to the contract's enforceability and help prevent potential disputes due to intentional delays or bad faith actions.