Contracts
An Oregon real estate purchase agreement includes a 10-day inspection contingency. The buyer's inspector finds a minor issue with the water heater and the buyer attempts to terminate the contract and recover earnest money. The seller argues the defect is minor. What determines whether the buyer can terminate?
AThe severity of the defect determines whether the buyer can terminate
BThe exact language of the contingency — if it allows termination based on any inspection finding, the buyer may terminate regardless of severity✓ Correct
CThe Oregon Real Estate Agency determines disputes over inspection contingencies
DThe buyer forfeits earnest money for minor defects
Explanation
The rights of the parties depend entirely on the contract language. A broadly worded inspection contingency ('buyer's approval of inspection in buyer's sole discretion') allows the buyer to terminate for any reason — including subjective dissatisfaction.
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