A buyer and seller in Minneapolis have a fully executed purchase agreement. The seller is now claiming the contract is unenforceable because the buyer's earnest money check has not yet cleared the bank. Under Minnesota contract law, is the purchase agreement enforceable at this point?
Correct Answer
C) Yes, because a fully executed purchase agreement is a binding contract regardless of whether earnest money has cleared
A fully executed purchase agreement is a binding contract under Minnesota law once all parties have signed and communicated acceptance. Earnest money is not a legal requirement for contract formation — it serves as a good-faith deposit and evidence of the buyer's intent, but its clearance does not determine whether the contract is enforceable. The essential elements of a valid contract (offer, acceptance, consideration, and mutual assent) are satisfied upon execution.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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