When Does a Contract Become Enforceable?

1292 Words Sep 5th, 2011 6 Pages
By: Miriam J. Baer, Deputy Legal Counsel
Have you ever been involved in a real estate transaction in which you were not certain whether the parties had a binding contract? Perhaps the buyer and seller had reached an oral agreement when another buyer made an offer on the property. Maybe one of the parties got "cold feet" and wanted to back out of the deal even after signing the contract.
To determine whether parties have an enforceable contract, you must be familiar with two basic concepts of contract law: the Statute of Frauds and the concept of acceptance.
The Statute of Frauds
Every state has a law known as the "Statute of Frauds," which requires certain contracts to be in writing in order to be enforceable. Included in the North
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Therefore, in a typical residential sales transaction, communication of acceptance can be made orally, e.g., by calling and advising the buyer of acceptance. This oral acceptance does not violate the Statute of Frauds because the contract itself has been written and signed. It is only the communication of acceptance that is oral.
(Note that delivery of the contract document is not required to make a contract enforceable. The contract is formed at the time of communication. The real estate agent does, of course, have a duty to provide copies of the contract to the parties under the Real Estate License Law.)
Because communication must be made to the other party in the transaction or to the other party 's agent, it is important to know whether the real estate agents involved represent the buyer or the seller.
a. Communicating acceptance of a buyer 's offer or counteroffer
Suppose that a seller signs a buyer 's written offer and then tells the listing agent that he has accepted the offer. Is the seller 's statement to the listing agent sufficient to create a binding contract '? No. The seller has communicated acceptance only to his own agent, not to the buyer or to the buyer 's agent. So, the contract is not yet enforceable.
Assume then that the listing agent tells the selling agent that the seller has signed and accepted the buyer 's
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