A home buyer (B) and seller (S) of a house agree on a price of 3,000,000.00 dollars, 25 per cent paid immediately and 75 per cent paid upon delivery of keys and title registration. S values the house at 3,000,000.00 dollars. Before the date of delivery, B calls S saying that she needs to refinance. After repeated delays, S finds a new buyer who buys the house for 2,500,000.00 dollars. S sues B for 500,000.00 dollars.

(a) (5 marks) Fully explain the most socially efficient outcome in this problem?

(b) (10 marks) How would the expectation damages rule apply in this contract? Would it lead to an efficient outcome? Fully explain why or why not?