Contract Law and Real Estate Contracts
Formation basics
Offer, acceptance, consideration, capacity, and lawful purpose. Real property contracts must satisfy the statute of frauds: written, signed by the party to be charged, with the essential terms (parties, property description, price, financing). Montana recognizes electronic signatures, so email and e-signature execution is generally binding.
Where questions go wrong
- A counteroffer terminates the original offer; the offeree becomes the offeror.
- Acceptance must be unequivocal and communicated by the offeree; silence is not acceptance.
- An option needs separate consideration; without it, it is a revocable offer.
- Earnest money is not automatically liquidated damages - that depends on contract language.
- Contingencies (financing, inspection, appraisal, sale of the buyer's home) must be satisfied or waived in writing.
- Assignment transfers rights, not automatically duties; a novation substitutes a new party and discharges the old one.
- Licensees may complete the approved forms but may not draft custom clauses or give legal advice.
Worked example: a $400,000 purchase with $8,000 earnest money. The buyer walks with no contingency open. If the contract designates the deposit as liquidated damages, the seller keeps $8,000 and releases the buyer. If it does not, the seller must prove actual damages and mitigate; specific performance may also be available.
Rule of thumb: read the contingency and default paragraphs out loud before answering - most contract questions turn on a deadline or a remedy clause, not on the definition of consideration.