ContractsIntermediateArizona Exam

Under the doctrine of 'time is of the essence' in an Arizona contract, failing to close on the specified date means:

AA 10-day automatic extension is granted to both parties

BThe non-performing party may be in breach of contractCorrect

COnly the buyer can be penalized

DThe contract automatically extends for 30 days

Why The non-performing party may be in breach of contract Is Correct

Answer B: The non-performing party may be in breach of contract

When a contract states 'time is of the essence,' deadlines are strictly enforceable. Failure to perform by the deadline can constitute a breach of contract, potentially allowing the other party to cancel and pursue remedies.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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Key Terms to Know

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

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Real Estate Contracts Guide

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