Contracts
What is 'impossibility of performance' as a defense in a Rhode Island real estate contract?
AWhen a party simply doesn't want to perform
BA legal defense allowing discharge of contractual obligations when performance becomes objectively impossible due to unforeseen circumstances beyond the parties' control✓ Correct
CWhen the property value falls below the contract price
DWhen a party cannot obtain financing
Explanation
Impossibility of performance may excuse a party's contractual obligations if performance has become objectively impossible due to circumstances beyond the parties' control—such as the property being destroyed by fire before closing.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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