Contracts and Sales Multistate Bar Practice Exam

If a condition fails, what may the beneficiary of that condition do under the idea of election waiver?

1. They must terminate the contract automatically

2. They may choose to continue under the contract

3. They must renegotiate the entire agreement

4. They can demand a price reduction

The correct answer is: They may choose to continue under the contract

When a condition fails in a contract, the beneficiary of that condition has the option to choose how to proceed with the contract, which is encapsulated in the concept of election waiver. By electing to continue under the contract despite the failure of the condition, the beneficiary effectively waives the right to take advantage of the condition's failure. This means that they can still benefit from the remaining parts of the contract and choose to proceed as if the condition were met. This concept acknowledges that parties in a contract often have the flexibility to navigate issues that arise and may not be strictly bound to terminate the contract solely due to a failed condition. Therefore, the beneficiary has the discretionary power to continue with the contract, ensuring that they can potentially achieve their interests despite the setback of the condition. The other potential options do not accurately reflect the principle of election waiver. Automatically terminating the contract does not consider the beneficiary's choice and flexibility. Renegotiating the entire agreement is unnecessary if the beneficiary prefers to continue under the current terms. Lastly, demanding a price reduction does not align with the waiving of the condition's failure; it suggests seeking compensation rather than exercising the choice to continue with the contract.