Mercantile Limited,a corporation in Toronto,enters into an agreement with Jackson to advance $300 000 to Jackson for the purchase of farming equipment.Jackson agrees to give Mercantile Limited a mortgage over his home as security for the advance of the money.The terms of the agreement contain an appraisal provision that the commitment to make the loan is subject to an appraisal of Jackson's home of at least $350 000.The appraisal provision is known as an appraisal warranty.

Question

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An appraisal warranty is a provision in a loan agreement that makes the commitment to make the loan subject to an appraisal of the property securing the loan. In this case, the appraisal provision is an appraisal warranty because the commitment to make the loan is subject to an appraisal of Jackson's home of at least $350,000.

Mercantile Limited,a Corporation in Toronto,enters into an Agreement with Jackson