Mark agrees to buy Jennifer's Florida home for $350,000. The contract states that Mark will pay $1,000 earnest money, but he never actually deposits it. Jennifer later tries to cancel the contract claiming failure of consideration. What is the likely outcome?
Correct Answer
C) The contract remains valid and enforceable
Correct: C - In Florida, the promise to pay earnest money is sufficient consideration; actual payment isn't required for contract validity. The promise to buy and sell at the stated price constitutes consideration. Why not A: Non-payment of earnest money is a breach but doesn't invalidate the contract. Why not B: The mutual promises to buy and sell are adequate consideration. Why not D: While Jennifer might have remedies for breach, the contract remains valid.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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Previous Question
A buyer submits an offer on a Florida property with an expiration time of 5:00 PM Friday. At 4:45 PM Friday, the seller's agent calls to say the seller accepts. At 4:55 PM, before receiving the signed acceptance, the buyer calls to revoke the offer. The signed acceptance arrives at 5:10 PM. Is there a binding contract?
Next Question
Two Florida real estate brokers verbally agree that Broker A will pay Broker B a 25% referral fee for a commercial transaction. Broker B refers a client who purchases a $2 million property. When Broker A refuses to pay the referral fee, claiming no written agreement exists, what is Broker B's legal position under Florida law?