If a contract states that the contract is "subject to the purchaser obtaining financing for $10 000 at 8 percent by 5:00 p.m.Friday,March 11," it means that
A) if the purchaser does not obtain the financing, he is in breach of contract.
B) if the purchaser does not obtain the financing, the contract is frustrated.
C) if the purchaser does obtain the financing and properly notifies the seller, the contract is then in full force and effect.
D) there is a contract whether the purchaser gets the financing or not, because the statement is just a statement of intention and doesn't affect the contract.
E) the obtaining of financing is a condition subsequent and ends the contract.

Question

Quizplus · Accepted Answer

The statement in the contract sets a condition precedent, meaning that the contract will only be binding if the purchaser obtains financing for $10,000 at 8 percent by the specified time. If the purchaser does satisfy this condition, the contract will be in full force and effect. Therefore, option A and B are incorrect as they suggest that the purchaser not obtaining financing will invalidate the contract. Option D is also incorrect as the statement does affect the contract by making it conditional. Option E is incorrect as well since the obtaining of financing is a condition precedent, not subsequent.

If a Contract States That the Contract Is "Subject to the Purchaser