A seller in Irvine lists her home for $720,000. A buyer submits an offer at $700,000 with a 30-day close of escrow. The seller crosses out the 30-day close and writes in 45 days, then signs and returns the document. The buyer signs the modified document without objection. Under California law, at what point was a binding contract formed?
Correct Answer
D) When the buyer signed the seller's counteroffer and communicated acceptance back to the seller
Under California Civil Code §1583-1585, the seller's modification created a counteroffer. A binding contract was formed when the buyer accepted the counteroffer by signing and that acceptance was communicated to the seller or the seller's agent. Both mutual consent and communication of acceptance are required.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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