A couple in Elizabethtown, Kentucky signs a purchase contract to buy a home for $275,000. As consideration, the buyer promises to pay the purchase price and the seller promises to convey the deed. Before closing, the seller claims the contract is unenforceable because the buyer has not yet paid any money. Under Kentucky contract law, is the seller correct?
Correct Answer
B) No, because a promise to perform in the future constitutes valid consideration under Kentucky contract law
Under Kentucky contract law, consideration does not need to be paid immediately in cash. A promise to perform a future act — such as the buyer's promise to pay $275,000 at closing — constitutes valid legal consideration. This is known as executory consideration. The mutual exchange of promises (buyer promises to pay; seller promises to convey) is sufficient to support an enforceable contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
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.
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