hard · National Real Estate Exam contracts

Under general common-law contract principles, what is the buyer's strongest legal argument that the contract remains enforceable despite the late deposit?

1. The earnest-money clause is a covenant rather than a condition, so its breach gives the seller only a damages remedy, not a right to cancel, because timely deposit was not made an express condition precedent to the seller's duty to convey
2. Time-of-the-essence clauses are generally unenforceable as unlawful penalties in residential real-estate purchase agreements under this theory, so a minor one-day delay in depositing earnest money must automatically be excused by the reviewing court
3. The buyer's late earnest-money deposit constitutes a material breach of the purchase agreement, but the seller waived that breach entirely by accepting the late funds before ever sending any written notice of termination to the buyer
4. Because the delay in depositing earnest money was only a single business day and caused the seller no actual demonstrable prejudice, the doctrine of substantial performance fully discharges the buyer's remaining obligation and bars any cancellation

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