Michael Products Limited and Jensen Corporation enter into an agreement under which Michael Products Limited agrees to supply 20 tonnes of soap to Jensen Corporation. Jensen agrees to pay $20,000 for the products. The agreement includes a provision to the effect that the agreement is conditional of Jensen providing a letter from a bank, no later than two days after the execution of the agreement, that Jensen Corporation has the funds to pay for the goods. Three days after the signing of the agreement, Michael Products Limited has not provided the letter from the bank.
Jensen Corporation can because _.
A) terminate the contract; the contract is void
B) continue with the contract; the contract is not void
C) walk away from the contract; the contract is void
D) continue with the contract; the contract is effective

Question

Quizplus · Accepted Answer

The agreement clearly states that it is conditional on Jensen providing a letter from the bank within two days after the execution of the agreement. Since three days have passed and Michael Products Limited has not received the required letter, Jensen Corporation can walk away from the contract and consider it void. The contract is not effective because the condition was not fulfilled.

Michael Products Limited and Jensen Corporation Enter into an Agreement