Performance, contingencies, and remedies

A purchase agreement often remains executory for weeks while the parties investigate, obtain financing, deliver documents, and prepare to close. Performance means fulfilling the obligations actually promised, within the contract's timing and conditions. It does not mean that every party must immediately do everything described anywhere in the agreement.

Separate a promise from a condition. A promise is an undertaking to act. A condition is an event affecting whether an obligation becomes due or continues. A buyer may promise to apply diligently for a loan while also retaining a financing contingency. Failure to obtain the loan despite required efforts may be different from failing to apply at all.

Conditions can be precedent, concurrent, or subsequent. A condition precedent must occur before the related obligation is due. Concurrent conditions are performed together, such as delivering the required deed and paying the purchase funds through escrow. A condition subsequent can end an existing duty when the specified event occurs.

An inspection contingency can allow the buyer to evaluate the property and exercise stated choices. A financing contingency addresses obtaining the specified loan. An appraisal contingency addresses value as measured under the agreement. These provisions are related but not identical: a lender's willingness to make some loan does not establish that the property appraised at the agreed price.

The contract determines deadlines, permitted objections, removal procedures, cancellation rights, and notice requirements. Do not assume a contingency automatically disappears merely because a date passes. Many California forms use affirmative removal and notice procedures, but no single commercial form supplies a universal rule for every agreement.

A party must exercise contractual discretion honestly and comply with applicable good-faith obligations. A financing contingency is not ordinarily permission to deliberately destroy one's ability to qualify and then demand a consequence-free cancellation. Conversely, a legitimate contingency should not be treated as meaningless simply because the seller prefers certainty.

An amendment changes the agreement by the parties' assent. A salesperson cannot grant an extension for a principal without authority. If the parties agree to change closing, document the changed date and consider how the amendment affects related deadlines, possession, financing, and any existing notices.

Tender is an offer to perform as required. A party seeking enforcement may need to show readiness and ability to perform the party's own obligations. A buyer who demands a deed while refusing to provide the agreed funds has not presented the same case as a buyer fully prepared to close.

A breach is a failure to perform a contractual obligation without a valid excuse. Materiality matters: a substantial failure going to the bargain's core can have consequences different from a minor, correctable defect. An unequivocal advance refusal to perform may constitute anticipatory repudiation, but uncertainty or a request to renegotiate is not automatically the same thing.

Changed fact: "I will not convey the property under this contract" is a definite refusal. "Could we extend closing? I will meet the existing date if you decline" is not the same refusal. The claimant's ability to perform also matters; a disappointed buyer who could not fulfill the bargain has not established every element merely by pointing to the seller's statement. CACI 324, printed pages 133-134.

A time-is-of-the-essence clause emphasizes the importance of timely performance. Still, analyze waiver, agreed extensions, notice provisions, and applicable law. A party's course of conduct can affect strict enforcement. The safest exam method is to apply the actual facts and language, not assume every missed date instantly forfeits all rights.

An assignment transfers contractual rights. Delegation transfers performance responsibility to another person to the extent permitted. Unless the other party agrees to a release or a novation occurs, the original obligor can remain liable. Some contracts prohibit or condition assignment, and personal-service obligations raise particular concerns.

If Buyer A assigns the right to purchase to Buyer B, Seller C has not necessarily released A from the duty to perform. A novation requires agreement to substitute a new obligation or party and discharge the replaced obligation. The release is the important difference. Merely changing the name on an escrow worksheet does not establish everyone's consent to a novation.

An amendment changes selected terms while retaining the underlying agreement. A rescission unwinds the contract. An accord and satisfaction settles an existing obligation through an agreed substitute and its performance. These concepts solve different problems and should not be treated as synonyms for any document signed after acceptance.

Having grounds for rescission is different from properly effecting it. Subject to statutory qualifications, Civil Code section 1691 calls for prompt notice after discovery and restoration, or an appropriate offer to restore, benefits received. A party cannot ordinarily unwind the bargain while insisting on retaining its benefits. This is not the procedure for every contractual contingency cancellation; identify the asserted right before choosing the process.

The parties can agree to rescind. California law also recognizes grounds for a party to seek rescission, including qualifying fraud, mistake, duress, undue influence, and specified failures of consideration. The required procedure, timing, notice, and restoration of benefits matter.

Rescission aims to restore the parties toward their prior positions. Restitution concerns returning benefits or their value. A cancellation instruction releasing escrow funds may resolve possession of the deposit without necessarily releasing every separate damage claim unless the agreement says so. Conversely, a comprehensive settlement can release more than the deposit dispute.

There is no universal three-day right to cancel every California home purchase. Specific statutes create cancellation or rescission rights in particular circumstances, and contracts create others. Identify the actual trigger. Do not import a consumer-credit rescission rule into an ordinary purchase-money home sale without a basis.

Compensatory damages seek to compensate legally recoverable loss caused by the breach. They are not automatically a punishment. Rules about causation, foreseeability, proof, and mitigation limit recovery. A harmed party generally cannot enlarge avoidable losses and expect the other party to pay every resulting expense.

Specific performance is an equitable remedy ordering the promised performance. Real estate is treated as unique, and California recognizes a presumption that monetary compensation is inadequate for breach of an agreement to transfer real property. Other requirements still apply, including a sufficiently definite and enforceable agreement and the claimant's ability to perform. A buyer does not automatically obtain the property merely by asking for this remedy.

For a single-family dwelling the party seeking performance intends to occupy, section 3387 makes the inadequacy-of-money presumption conclusive. In other cases it affects the burden of proof. Even a conclusive presumption decides this issue, not whether a valid contract exists or every other requirement for relief is met. Section 3387.

Contractual mediation and arbitration provisions can affect how disputes proceed. Mediation facilitates a negotiated resolution; the mediator does not ordinarily impose a binding result. Arbitration submits the dispute to an adjudicator under the agreement and governing law, potentially producing a binding award. Signing one is not the same act as agreeing to the other.

For qualifying one-to-four-unit residential property the buyer intends to occupy, California's liquidated-damages law creates special rules. An amount actually paid of no more than 3% of the price is valid under the ordinary rule unless the buyer proves it unreasonable. Above 3%, the party seeking enforcement must establish reasonableness. Special rules apply to certain initial condominium sales. Each party must separately sign or initial the provision, and printed provisions must meet statutory type requirements.

Test both the unit count and the buyer's intent when the contract is made. An investor acquiring a duplex solely for rental does not satisfy the buyer-residence condition merely because tenants will live there. A buyer planning to occupy one unit of a five-unit building fails the unit-count condition. Neither failure automatically makes the clause valid or invalid; it means the special section 1675 residential framework is not established by those facts. Section 1675(a).

The 3% figure is not a universal deposit cap or an automatic forfeiture. Enforceability, the amount actually paid, default, contract language, and the statute's requirements still matter. Escrow does not become a court empowered to award disputed money simply because one party alleges breach.

A later deposit needs its own agreement. If more than one buyer payment is to constitute liquidated damages under section 1675, section 1678 requires a separate qualifying provision, separately signed or initialed by each party, for each payment after the first. The total must still satisfy section 1675. Initialing the original provision does not automatically make a later deposit increase enforceable as liquidated damages. Section 1678.

A buyer intends to occupy an existing single-family home when agreeing to its $800,000 purchase and deposits $20,000 under a properly signed liquidated-damages provision. Three percent is $24,000, so the deposit is below the threshold. The property and occupancy facts establish the section 1675 residential category; the calculation identifies the below-3% branch. Neither decides whether the buyer defaulted or whether a valid contingency permits cancellation.

Always determine the duty, applicable condition, and conduct before selecting the remedy. Assignment does not necessarily release liability, rescission differs from damages, and a liquidated-damages clause does not authorize unilateral seizure of disputed funds.