12. Nissan Corp., wishing to dispose of its surplus warehouse, offered it for sale for $500,000 cash. Belle informed Nissan that she would pay the price asked. A contract of sale was executed by the parties and Belle paid 10% of the price as a down payment to Nissan. The closing was set for 4 weeks later, at which time Belle was to pay the balance by certified check and Nissan was to deliver the deed. The contract provided that Nissan Corp. would retain the down payment as liquidated damages if Belle defaulted. When the time for the closing arrived, Belle told Nissan Corp that her arrangements to borrow the balance of the purchase price had not been completed and she requested an additional two weeks to complete the arrangements, Nissan Corp. refused and stated that it was cancelling the contract and retaining the down payment.

(a) Did Belle's failure to pay on time constitute a material breach of the contract? Explain.

(b) If Belle raises the money in two weeks, is she entitled to a decree of specific performance of the contract against Nissan Corp.? Explain.

Assume that Nissan Corp. granted Belle an additional 6 weeks to raise the money, but notified her that it would grant no further extensions. At the end of 6 weeks, Belle had still been unable to raise the money, and Nissan Corp. notified her that it was cancelling the contract. A month later, Nissan Corp. sold the warehouse to Chin for $550,000.

(c) Is Belle now entitled to recover her $50,000 down payment? Explain.

Assume that when Belle originally negotiated for the purchase, Nissan Corp. had little confidence in Belle's ability to raise the money. Accordingly, the parties agreed to a clause in the contract stating, "Time is of the essence in this contract." At the closing Nissan Corp was unable to tender clear title to Belle because the day before the State Tax Department had notified Nissan that an unpaid franchise tax constituted a lien on the warehouse. Nissan Corp. requested a delay of 3 days to pay the tax and satisfy the lien. Belle, who had reconsidered her bargain, refused any extension, tendered her certified check for the balance, and demanded that Nissan deliver clear title. When Nissan Corp. was unable to comply, Belle said she was cancelling the contract.

(d) Is Belle entitled to the return of her down payment? Explain.

(e) Is Nissan Corp. liable in damages to Belle for Belle's cost of conducting a title search? Explain.