Edith Edwards has agreed to sell her cooperative apartment to Arthur Anderson. O

Question

Edith Edwards has agreed to sell her cooperative apartment to Arthur Anderson. On January 30, 2018, Ms. Edwards sent the following email to Mr. Anderson: “It was so nice speaking with you yesterday and I am glad we were able to agree on the purchase price for my apartment. As we discussed, I will sell my apartment to you for $80,000, but this will not become final until you have secured a mortgage on or before March 30, 2018. I understand that you would like your brother-in-law, who is a general contractor, to renovate the kitchen, and he will be returning to the Dominican Republic on April 1st. Since I am in Florida until May 15th, I will arrange for the building superintendent to give you and your brother-in-law access to the apartment to do the renovation. All of this is contingent on a deposit of ten percent (10%) of the purchase price paid by cashier’s check in the amount of $8,000 on or before February 15, 2018. Please let me know if I have left out any details.” Mr. Anderson replied the same day via email stating: “You have covered everything. I will send the check.” On February 5, 2018, Mr. Anderson sent a cashier’s check of $8,000 made out to Edith Edwards. On February 8, 2018, Mr. Anderson got the key to the apartment from the superintendent and his brother-in-law began the kitchen renovation. The renovation was completed on March 5, 2018. By March 13th, Mr. Anderson had been denied a mortgage at three different banks and realized that he was not going to be able to purchase the apartment. Mr. Anderson has spent $20,000 renovating the kitchen, including $9,000 in appliances and $11,000 in labor paid to his brother-inlaw. Mr. Anderson sent an email to Ms. Edwards on March 17th explaining that he has made every good faith effort to obtain a mortgage and has not been successful. As a result, he is unable to purchase the apartment. He asked Ms. Edwards to return the $8,000 deposit payment and also to reimbursement him for the renovation to the kitchen. Ms. Edwards replied that he has breached the contract and therefore she owes him nothing.

QUESTIONS: 1. Do Ms. Edwards and Mr. Anderson have a legally binding contract? Explain why/why not. Be sure to discuss the elements of contract, the requirements for a legally binding contract, and the terms of the agreement. 2. Is Mr. Anderson entitled to recover any monies? Explain all possible reasons for recovery and how much he will be able to recover.

Explanation / Answer

Generally, to be legally valid, most contracts must contain two elements: All parties must agree about an offer made by one party and accepted by the other. Something of value must be exchanged for something else of value. This can include goods, cash, services, or a pledge to exchange these items In the given Case both the parties i.e. Edith Edwards has agreed to Sell the house and Mr. Anderson has agreed to purchase the house. Also Mr. Anderson has transferred 10% of the purchase price to Edith Edwards as an advance. Therefore the contract is legally binding between Edith Edwards and Mr. Anderson. Elements of Contract - For a contract to be legally binding it must contain four essential elements: 1. an offer. 2. an acceptance. 3. an intention to create a legal relationship. 4. a consideration Yes Mr Anderson is entitled to recover the money as the term of agreement included that sale of apartment would not be final until you have secured a mortgage on or before March 30,2018. So, Mr Anderson should be able to recover the deposit amount of 10% , however the expenses incurred by him on renovation, purchase of appliances and labour cost would not be recoverable. Note- Best effort have been made to answer the question correctly, in case of any discrepencies kindly comment and i will try to resolve it as soon as possible. Please provide positive feedback.

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