What does a contingency in a purchase contract allow?

A contingency in a purchase contract is a specific condition or set of conditions that must be met for the contract to be binding. This concept is crucial in real estate transactions, as it provides protections for both the buyer and the seller. By including contingencies, the parties involved can outline specific scenarios in which the contract can be canceled without penalty. This could include situations such as failing to secure financing, property inspections revealing significant issues, or other conditions that may arise during the purchasing process.

The option mentioning either party having the ability to cancel the contract under certain circumstances directly aligns with this definition. In contrast, the other options suggest outcomes that do not reflect the purpose of a contingency. For example, negotiating a lower price is typically handled during the initial discussions rather than through contingencies, while requests for repairs or additional earnest money are generally separate from the conditions that allow for contract cancellation. Thus, the function of a contingency is to provide a pathway for parties to exit the agreement if the outlined conditions are not met, making option B the correct choice.