Contracts
A contract clause stating 'if the buyer does not obtain financing within 21 days, either party may cancel' is best described as a:
ALiquidated damages clause
BFinancing contingency✓ Correct
CArbitration clause
DPenalty clause
Explanation
This is a financing contingency (also called a mortgage contingency or loan contingency). It makes the contract conditional on the buyer obtaining financing within a specified time frame. If financing is not obtained, either party (or typically just the buyer) can cancel.
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