Contracts
What is 'failure of consideration' as a defense to enforcing a Delaware real estate contract?
AThe failure of one party to provide financial consideration to the other
BWhen the consideration that was the basis of the contract fails to materialize — such as when a seller's promised actions never occur — potentially excusing the buyer from performance✓ Correct
CThe failure to consider all offers before accepting one
DA defense available only in commercial real estate contracts
Explanation
Failure of consideration occurs when the promised consideration (the thing of value that induced the contract) fails to materialize — rendering the consideration illusory or non-existent. In real estate, if a seller promises to deliver clear title and cannot (cloud on title), the buyer may have a failure of consideration defense.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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