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The parties dispute the legal effect of a contested transaction. A buyer took title after record notice of a use restriction and then built inconsistently with it. Another actor changed position after relying on the relevant statement, document, or official action. The parties disagree about the legal effect of those facts. Which analysis is most consistent with these facts?

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The court should resolve the dispute by applying the operative rule to the material facts: The answer should identify the governing rule for Covenants and apply it to the operative facts. Resolve the dispute on equitable fairness alone without identifying the governing doctrine or its limits. Reject the claim or defense solely because the opposing party disputes a required fact. Treat the formal label attached to the claim or defense as conclusive and disregard facts bearing on the rule's elements.

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