contract-law
Buyers &quot;breach of contract&quot; by not providing &quot;proof of funds&quot;....is it enforcable and nulls purchase contract?
<p>Seller had a standard Real Estate contract with a section entitled "Cash Funds and Financing Contingency" the checked paragraph stated:  </p>

<ul>
<li>No Contingency on Obtaining Cash Funds</li>
</ul>

<p>. "Buyer represents there are no contingencies on Buyer obtaining the necessary cash.....sub chapter A, Verification of Cash Funds... Buyer to provide evidence that is satisfactory to Seller of the availability of Cash funds... within a certain time frame... 
The Buyer HAS NOT provided evidence nor additional earnest monies per contract.... does this release seller from contact ... as a Breach of Contract?... as now the Buyer is NOT providing evidence but threatening a law suit.... </p>

<h2>A breach of contract does not (necessarily) allow the innocent party to terminate the contract</h2>

<p>Contracts contain 'terms', the breach of which is legitimate grounds for termination and 'warranties', the breach of which is not legitimate grounds for termination.</p>

<p>Which is which depends on if the condition is fundamental to the performance of the contract or incidental. This depends not only on the condition but on the nature of the breach. For example, transferring the consideration is pretty fundamental to all contracts - if you don't pay, for example, that is likely grounds for termination. </p>

<p>However, there is a difference between not paying and not paying <em>on time</em> - the first is a term, the second is likely a warranty. It can be difficult to tell the difference between non-payment and late-payment. Incidentally, this is the purpose of the phrase "time is of the essence" - it specifically makes the time for doing something a term rather than a warranty.</p>

<p>The contract can be explicit and specifically list grounds for termination and the procedures to be followed. If it does, and a party wants to use them, it is <em>crucial</em> that they follow the procedures to the letter. If for example, the contract requires a 'show cause notice' to be sent by post and one is sent by email it is <em>not</em> a 'show cause notice' and any purported termination that relies on it would be invalid.</p>

<p>Taking your facts at face value the buyer has breached the contract. The vendor can sue for damages or go to the court and seek an order for specific performance.</p>

<p>On the face of it, this condition would appear to be a warranty - its performance is not essential to the completion of the contract. As such, the vendor does not have the right to terminate the contract. If the vendor does not fulfil their obligations under the contract they will themselves be in breach - allowing the buyer to etc. etc.</p>

<p>In particular, if the vendor purports to terminate the contract they will, in fact, have repudiated it. The buyer can either i) accept the repudiation, legally terminate the contract and sue for damages or ii) affirm that the contract remains on foot and if the vendor continues in their breach sue them etc. etc. </p>

<p>It appears that the vendor has indicated to the buyer that they have (or are considering) terminating the contract. They have no right to do so and the buyer appears to have chosen to treat this as an anticipatory breach and is putting the vendor on notice about that. That is, if the vendor continues to assert the contract is terminated, they will take legal action.</p>

<blockquote>
  <p>Buyers “breach of contract” by not providing “proof of funds”…is it
  enforcable and nulls purchase contract?</p>
  
  <p>does this release seller from contract?</p>
</blockquote>

<p>Yes. The seller may proceed on the theory of either <em>breach of contract</em> or a <em>voidable one</em>.</p>

<p>Absent any clause to the contrary or exceptional circumstances, the seller is entitled to void the contract (or rescind it, accordingly) once the deadline established therein has expired. See <em><a href="https://www.nylitigationfirm.com/files/restat.pdf" rel="nofollow noreferrer">Restatement (Second) of Contracts</a></em> at § 36(2): </p>

<blockquote>
  <p>an offeree's power of acceptance is terminated by the nonoccurrence of
  any condition of acceptance under the terms of the offer</p>
</blockquote>

<p>Here, the non-occurrence of buyer's proof of funds within the given time frame is tantamount to his power of acceptance being terminated by lapse of time § 36(1).</p>

<p>Furthermore, the <em>Restatement</em> at § 265 indicates that the buyer's non-compliance with the contract creates a condition where "<em>[seller's] remaining duties to render performance are discharged</em>", since the lack of proof of buyer's funds contradicts "<em>a basic assumption on which the contract was made</em>", <em>Id</em>, the basic assumption being the buyer's solvency for purchase of the property.</p>

<p>The substance of <em>Restatement</em> at § 229 also implies that the seller is, by default, entitled to void the contract for non-occurrence of a condition:</p>

<blockquote>
  <p>To the extent that the non-occurrence of a condition would cause
  disproportionate forfeiture, a court may excuse the non-occurrence of
  that condition unless its occurrence was a material part of the agreed
  exchange.</p>
</blockquote>

<p>The buyer is unlikely to prevail on that item of the <em>Restatement</em>. Since in the contract "<em>Buyer represents there are no contingencies on Buyer obtaining the necessary cash</em>", the lack of proof of funds and of deposits is <em>material</em>: It signals an evident risk that the buyer ultimately might fail to "obtain the necessary cash".</p>

<p>Additionally, the buyer would need to overcome other reasonable arguments advanced by the seller in court. For instance, the argument that as long as the property is locked by the contract, the seller might be missing bids from elsewhere which are potentially more profitable.</p>

<p>Whether or not the expiration of the deadline entitles the seller to remedies (economic or otherwise) in lieu of voiding the contract, that is an issue that can be ascertained only from the terms of the contract.</p>
