In 2006, M. Jay Carter hired Robert Casey Jones, a real estate agent at The Janet Jones

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In 2006, M. Jay Carter hired Robert “Casey” Jones, a real estate agent at The Janet Jones Company, to represent him in a real estate transaction with Ernie and Karen Cline. Carter intended to purchase residential property located at 8 Longfellow Place in Little Rock, Arkansas. The real estate contract was signed on June 11, 2006. It contained a provision setting the purchase price for the property at $1,037,500, “subject to Buyer’s ability to obtain financing.” The contract also included a handwritten provision under this same subsection that the buyer was required to “provide a letter of approval within 10 business days.” On June 21, 2006, Pulaski Mortgage Company approved a loan for Carter to purchase the Longfellow property. The approval letter was conditioned upon, among other things, there being no material change in Carter’s financial condition that might adversely affect his current level of creditworthiness, credit score, debt, or income. Pursuant to this conditional approval, Carter was required to submit to Pulaski Mortgage prior to closing an employment certification providing evidence that his employment and income situation had not changed since his conditional approval. This approval letter from Pulaski Mortgage was submitted to Janet Jones Company within 10 business days as required by the contract, and closing was set for September 22, 2006. According to Carter and the documentation submitted to Pulaski Mortgage, Carter’s income began declining in July 2006. On September 8, 2006, Carter orally informed Pulaski Mortgage of his decline in income, and the company requested that Carter provide it with a year-to-date profit-and-loss statement and balance sheet. Carter also contacted Casey Jones on September 8, 2006, and told him that he had a decline in his third-quarter income and that he had informed Pulaski Mortgage of his current financial situation. On September 11, 2006, Carter submitted to Pulaski Mortgage additional documentation. On September 11, 2006, Pulaski Mortgage sent a notice of adverse action to Carter advising him that his “recent application for an extension or renewal of credit has been denied.” The company informed him that “the decision to deny your application was based on the following reasons: Excessive obligations. Insufficient income. Add[itional] current income information furnished by applicant.” On September 11, 2006, Casey Jones informed Shannon Treece, an independent contractor at Janet Jones Company and the Clines’ agent, that Carter would not be able to close the real estate transaction on the Longfellow property because he had lost his financing approval from Pulaski Mortgage. She then informed the Clines that Carter would be unable to close on their property. The Clines sued Carter for breach of contract. Should they succeed?

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Business Law The Ethical Global and E-Commerce Environment

ISBN: 978-1259917110

17th edition

Authors: Arlen Langvardt, A. James Barnes, Jamie Darin Prenkert, Martin A. McCrory

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