REE 4433 Final Exam Questions with Complete Solutions

The Maple Ridge Construction Company and Kasten entered in to an agreement for the purchase of lots in a subdivision owned by Kasten. Maple Ridge encountered problems obtaining financing and requested postponement of the settlement date. Kasten agreed to an extension of four months. Maple Ridge continued to try to obtain a suitable financing arrangement without success. Repeated requests for additional extensions were tuned down by Kasten. The settlement date passed with neither party preforming or demanding performance from the other. Five days after the expiration of the settlement date, Maple Ridge informed Kasten that it was ready to perform. Kasten refused Maple Ridge's tender, claiming that the contract had expired. Maple Ridge commenced an action in specific performance against Kasten in an attempt to force Kasten to comply with the terms of their contract. Who wins? Correct Answer-In this case, the court held that Maple Ridge had a right to specific performance of the contract. Although Kasten had refused further extensions of the settlement date, Maple Ridge had tendered performance according to the contract terms within a reasonable time after the extended settlement date. Further, the court found that the contract did not provide that time was of the essence, and that Kasten did not act as if time were of the essence. In a case for specific performance, the intention of the parties is controlling. Under the above facts, the court determined that the fixed settlement date was not a "condition requiring strict and punctual compliance in order to entitle the buyer to specific performance." The Eisenbergs sought a $164,000 loan from Comfed to finance the purchase of a house being built for them. The loan was to be secured by a mortgage on the new home, and then it was to be assigned to Comfed's parent, the Bank. One provision required that the Eisenbergs pay 2.5% of the face value of the loan as