Contracts, Purchase Agreements, and Contract Law
Building and breaking a contract
A valid contract needs offer, acceptance, consideration, capable parties, and a lawful objective; a real estate contract for an interest in land must also satisfy the statute of frauds (writing, signed by the party to be charged, with essential terms).
Offer and acceptance. A counteroffer terminates the original offer and becomes a new offer. Acceptance must be unequivocal and communicated; adding terms is a counteroffer, not acceptance. An option is a separate contract in which the seller keeps the property off the market for a stated period in exchange for consideration; the optionee has no duty to buy.
Key purchase agreement provisions. Earnest money, financing and appraisal contingencies, inspection and repair, title review, closing date, possession, risk of loss, default and remedies, and whether time is of the essence. Note that money paid toward the price is consideration; the amount of earnest money does not determine enforceability.
Breach and remedies. Damages, specific performance (available because land is unique), rescission, and liquidated damages. Liquidated damages must be a reasonable forecast of loss, not a penalty. Most contracts merge into the deed at closing, so post-closing claims must rest on fraud, warranty, or a clause that expressly survives.
Traps
Oral modification of a written land contract; assignment of the buyer's interest versus novation; misreading 'seller may retain earnest money as liquidated damages' as automatic rather than as the seller's election (and check state rules on who holds and releases the deposit).
Worked example
Buyer offers $300,000; seller counters at $310,000; buyer says nothing for a week, then attempts to accept the original $300,000. There is no contract - the counteroffer killed the original offer. The buyer's only path is a new offer.
Rule of thumb: read the contingency dates first; that is where most disputes live.