Scenario 3 Breach and Remedies

Freddie agreed to sell Maria a house in Georgia for $500,000. The sale was supposed to close by October 30, when the parties were to exchange the deed for the price. The contract included a provision that if Seller is unable to convey good, clear, insurable, and marketable title, Buyer shall have the option to:

1. accept such title as Seller is able to convey without reduction of the Purchase Price, or
2. cancel this Agreement and receive a return of all Deposits.

An examination of the public records revealed that the house did not have marketable title. Maria offered Freddie additional time to resolve the problem, and the closing did not occur as scheduled. Freddie decided the deal is over and offered to return the deposit. Maria refused and, in late November, decided to exercise her option to accept the house without marketable title. She notified Freddie, who did not respond. She then filed a lawsuit against Freddie in a state court.

• Discuss whether Freddie breached the contract and decide in whose favor the court should rule.
• Assume that Freddie breached the contract and determine what the appropriate remedy is in this situation.