What happens to a contract if the purchaser fails to pay the seller?

The correct interpretation regarding what happens when a purchaser fails to pay the seller is that the contract typically remains enforceable, but it does not automatically terminate. In this case, the seller can continue to pursue the remaining balance due under the terms of the contract. Even if a purchaser misses a payment, the contract does not just dissolve; there are rights and obligations that still exist for both parties.

In situations like this, it's common for contracts to have provisions that outline the consequences of non-payment, which often include the ability for the seller to enforce the contract or seek collection on the unpaid amount. The seller is generally expected to provide notice of the missed payment before taking further action, which could include seeking to enforce the contract or, in some cases, terminating it.

The option indicating that the contract continues with full credit for payments made aligns with standard practices in contract law, as it recognizes the efforts put forth by the purchaser prior to the default. It allows the seller to acknowledge the initial payment, maintain the contractual relationship, and demand performance (payment) according to the original agreement.