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Scenario 3 – Breach and Remedies

Scenario 3 – Breach and Remedies


Candace Dixon agreed to sell Alana Mendes a house in Alabama for $205,000. The sale was supposed to close by November 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:


accept such title as Seller is able to convey without reduction of the Purchase Price, or

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. Mendes offered Dixon additional time to resolve the problem, and the closing did not occur as scheduled. Dixon decided “the deal is over” and offered to return the deposit. Mendes refused and, in mid-December, decided to exercise her option to accept the house without marketable title. She notified Dixon, who did not respond. She then filed a lawsuit against Dixon in a state court.


Discuss whether Dixon breached the contract and decide in whose favor the court should rule.

Assume that Dixon breached the contract and determine what the appropriate remedy is in this situation.

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