Contracts and Contract Law
Formation and enforceability
A valid contract needs offer, acceptance, consideration, capacity, and lawful purpose; mutual assent must be communicated and unambiguous. A counteroffer terminates the original offer. The Statute of Frauds requires a writing signed by the party to be charged for the sale of land and for leases beyond the statutory term - so an oral agreement to sell land is generally unenforceable, though part performance or estoppel can sometimes rescue it. Preprinted real estate forms commonly include time is of the essence, liquidated damages (often the earnest money), and contingency clauses for financing, inspection, and appraisal.
Performance and remedies
Breach by the buyer usually means forfeiture of earnest money as liquidated damages or a suit for damages; breach by the seller usually permits specific performance because land is unique. Distinguish assignment (one party substitutes another; original party may remain liable) from novation (all parties agree to substitute, releasing the original). An option gives the holder the right to buy on stated terms for a stated period; a right of first refusal merely lets the holder match a third party's offer.
Traps
- Treating an option as an offer to sell rather than a contract right.
- Missing that a contingency that is not satisfied or waived kills the contract.
- Assuming an "as-is" sale removes the seller's statutory disclosure duty - in Iowa it does not.
Worked example: Buyer deposits $5,000 earnest money under a clause making the deposit the seller's sole remedy for buyer default. If the buyer walks without a contingency excuse, the seller may keep $5,000 but generally cannot also sue for additional damages.