Contracts and Contract Law
Formation
A valid contract needs competent parties, mutual assent (offer plus acceptance), consideration, and a lawful purpose. Real estate contracts also fall under the statute of frauds: they must be in writing and signed by the party to be charged, usually the seller. Electronic signatures and scanned copies satisfy the writing requirement.
Offer and acceptance mechanics
An offer stays open until it lapses, is revoked before acceptance, is rejected, or dies with the offeror. A counteroffer kills the original offer. Acceptance must mirror the offer and must be communicated; a verbal 'we accept' is unenforceable when the contract must be in writing. Earnest money is customary but is not legally required - a promise can serve as consideration.
Clauses that generate questions
Contingencies (financing, inspection, appraisal) must be satisfied or waived in writing by their deadlines. 'Time is of the essence' makes deadlines enforceable. Equitable title passes at signing and legal title at closing, which matters for risk of loss. Liquidated damages must be a reasonable forecast of loss to be enforceable rather than a penalty. Assignment transfers rights; novation substitutes a new party and releases the old one.
Traps
- A buyer who signs and returns the contract with a changed closing date has made a counteroffer, not an acceptance.
- Brokers do not practice law; drafting custom clauses or advising on legal rights is prohibited even when asked.
- Parol evidence bars prior oral agreements from contradicting the final written contract.
Rule of thumb / example
If a term is not within the four corners of the signed document, assume it does not exist. Example: seller counters at $315,000; the buyer's original $300,000 offer is dead and cannot later be accepted.