Question

A seller entered into a written contract to sell a tract of land to a buyer. The buyer was to pay $1,500 per month for five years, at which time the seller would deliver a warranty deed. The contract was silent as to the quality of title to be conveyed. After making 12 payments, the buyer discovered that a neighbor had an easement of way over the land, which was not discussed at the time the seller and buyer entered into the contract. The neighbor had not used the easement over the previous year because she had been out of the country. On the basis of the easement, the buyer wishes to cancel the contract.Which party is more likely to prevail?A The seller, because the neighbor's easement has been extinguished.B The seller, because the buyer has no basis on which to rescind the contract.C The buyer, because the obligation to convey marketable title is implied.D The buyer, because the seller has breached the covenant against encumbrances.

Answer 1

Answer:  

Option B is correct.

The party which is more likely to prevail is the seller, because the buyer has no basis on which to rescind the contract.

Explanation:

A Contract is an authorized obligatory agreement which identifies and administers the rights and duties of the contractors to the agreement. A contract is lawfully enforceable because it reaches the conditions and consent of the order. An agreement generally includes the exchange of money, goods & services, or obligations of any of these.

Further Explanation:

In the context of real estate, the nature of a contract is an exchange of (a) money from the customer for (b) some conveyance of title, and any quality of title from the retailer.

There are many other significant provisions of a contract but the exchange of cash for the title to real estate is the core activity taking place.

1. Warranty Deed: in the context of the real estate, a Warranty Deed, is a kind of document that presents the greatest amount of security to the customer of property. In this way, a Warranty Deed pledges or guarantees that the buyer owns the estate free and absolved of any notable charges, leases, or other encumbrances against it.

2. Contract Rescission: The term "Contract Rescission" is referred to as the cancellation or termination of a contract. Some other terminology is also used for this such as  “cancellation” or “overturning”. The main aim of contract rescission is to return the parties to their primary status before the contract was made.

Keywords:  

Contract, Warranty deed, Contract Rescission.

Answer 2

Option B is the correct answer.

The party, which is more likely to prevail is the seller because the buyer has no basis on which to rescind the contract.

Further explanation:

Contract:  A legally enforced agreement is considered a contract. An agreement is a promise between two parties to perform tasks for each other for some consideration. When an agreement becomes legally enforced, then it is considered as a contract. So the contract is a legally enforced promise between two parties for considerations. Both parties should get consideration and have a performance obligation.

Following factors are required for the contract:

Offer: A person should offer some consideration to another person for performing any activity or in the exchange of goods.

Acceptance of offer: The other person should accept the offer made by the first person.

Valuable consideration: There should be valuable consideration for both the parties.

Mutual obligation: Parties should promise to execute their obligated activities.

The performance capacity of the parties: Parties should be capable of performing the contract.

Legally enforcement: The contracts should be legally enforced.

These are the basic elements of a contract. If any contracts lack any of the given factors, then it will not be considered as a valid contract.

In the given case, the seller has a contract with the buyer to sell the land. The contract required the buyer to pay $1,500 per month for five years. There was no agreement about the title to be conveyed. There was an easement of way over the land which was not stated at the time of making agreement. However, the easement has not been used by the neighbor during the previous year.

The given contract comes under the category of real estate. The rescission of such contracts can be made, which gives the right of canceling the contract. The contract can be rescinded if the misrepresentation or mistake has been made by the other party. Rescission gives the right to unwind the transaction. Here, the contract cannot be rescinded by the buyer as there was no agreement about the transfer of title of the property.

The seller is likely to prevail as the buyer cannot rescind the contract. However, the seller will not prevail on the basis of the easement of way of the neighbor. The buyer is not likely to prevail as there was no agreement about conveying of the title of the property. Also, the buyer will not prevail on the basis that the seller is involved in the breach of contract as there was no communication among the buyer and seller about the easement.

Therefore, the party which is more likely to prevail is the seller because the buyer has no basis on which to rescind the contract. Hence, option B is the correct answer.

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Answer details  

Grade: Senior School

Subject: Business law

Chapter: Contract Act

Keywords: Written contract, a seller, entered into, the buyer was to pay $1,500, after making 12 payments, neighbor has an easement of way, rescind the contract, easement has been extinguishment, real estate, business law, contract law, warranty deed, had been out of the country, over the land.