New York Real Estate Salesperson ExaminationContractsMedium
A buyer enters into a purchase agreement for a new condominium. After signing, the buyer discovers a clause stating that the developer can unilaterally increase the purchase price by up to 10% if construction costs rise, and the buyer would be obligated to pay. This clause, if not disclosed upfront, could potentially render the contract:
- AAn implied contract.
- BVoid due to lack of consideration.
- CEnforceable regardless of disclosure.
- DVoidable by the buyer.
Show answer & explanationAnswer & explanation
Correct answer: D. Voidable by the buyer.
A contract that contains terms that were not fully or fairly disclosed, or where one party was induced into agreement under misleading circumstances, may be voidable by the disadvantaged party. The buyer would have the option to affirm or disaffirm the contract.
Why the other options are wrong
- A. This is an express contract as it's written; the issue is with the validity of a specific clause and its disclosure, not how the contract was formed.
- B. Lack of consideration implies no value was exchanged, which isn't the case here; rather, the terms are potentially unfair or undisclosed.
- C. Undisclosed, material terms that significantly disadvantage one party often affect enforceability, especially if they were not part of the mutual assent.
Voidable Contract
A contract that appears valid but one or both parties have the option to either affirm or reject it due to a defect (e.g., misrepresentation, duress, minor party).
- Binding until disaffirmed.
- Option to void rests with the injured party.
- Often results from lack of genuine assent.
Memory trick: Valid, Void, Voidable: The legal traffic lights of a deal.