A buyer and seller sign a residential purchase contract in Union County, New Jersey. During the three-business-day attorney review period, the seller's attorney sends a disapproval letter. Two days later, the seller's attorney calls the buyer's attorney and says the seller has changed her mind and wishes to reinstate the original contract. The buyer agrees and both attorneys sign a written reinstatement agreement. Is the contract reinstated under New Jersey law?
Correct Answer
A) Yes, because both parties agreed in writing to reinstate the contract, which satisfies the Statute of Frauds
Under New Jersey law, while a disapproval letter during attorney review terminates the original contract, nothing prevents the parties from subsequently entering into a new agreement or reinstating the original contract terms by mutual written agreement. If both parties voluntarily agree in writing to reinstate the original contract after a disapproval, that written agreement satisfies the Statute of Frauds and creates a new binding contract. New Jersey courts have recognized that parties may reinstate a contract terminated by attorney review through a subsequent written agreement. A new attorney review period would attach to this reinstated agreement.
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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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