A buyer's Agreement of Purchase and Sale includes a condition that the property passes a home inspection to the buyer's sole and absolute discretion. The inspection reveals a significant structural crack in the foundation, and the cost of repair is estimated at $50,000. Citing this, the buyer delivers a Notice of Non-Fulfillment to the seller. The seller, believing the buyer is acting in bad faith to escape the agreement, offers a $25,000 price reduction. The buyer rejects this and walks away. Which of the following best describes the legal standing of the buyer's actions?

Question: A buyer's Agreement of Purchase and Sale includes a condition that the property passes a home inspection to the buyer's sole and absolute discretion. The inspection reveals a significant structural crack in the foundation, and the cost of repair is estimated at $50,000. Citing this, the buyer delivers a Notice of Non-Fulfillment to the seller. The seller, believing the buyer is acting in bad faith to escape the agreement, offers a $25,000 price reduction. The buyer rejects this and walks away. Which of the following best describes the legal standing of the buyer's actions?

Answer options:

• The buyer's use of 'sole and absolute discretion' allows them to terminate the agreement without providing a reason, provided they genuinely received an inspection report.
• The buyer must provide objective evidence that the structural crack objectively makes the property unsuitable, despite the 'sole and absolute discretion' clause.
• The buyer is entitled to terminate if the inspection reveals any deficiency, regardless of its severity or the seller's attempts to remedy it. ✅ The buyer's discretion is limited by the implied duty of good faith; they cannot refuse to waive the condition for trivial or unreasonable grounds.

Correct answer: The buyer's discretion is limited by the implied duty of good faith; they cannot refuse to waive the condition for trivial or unreasonable grounds.

Explanation: Even with a 'sole and absolute discretion' clause, courts generally impose an implied duty of good faith and reasonable conduct. A buyer cannot simply walk away for arbitrary or capricious reasons; there must be a genuine, even if subjective, dissatisfaction with the inspection results that is not unreasonable in the circumstances, particularly given the magnitude of the repair in this scenario.