Angela, a South Carolina real estate licensee, is presenting an offer to purchase to her seller client, Mr. Webb. The offer from the buyer includes earnest money of $5,000 as the stated consideration. Mr. Webb asks Angela whether the contract would still be valid if the buyer never actually delivered the earnest money check. Under South Carolina contract law, what should Angela advise?
Correct Answer
A) The contract is valid regardless, because earnest money is not the legal consideration in a purchase agreement
Under South Carolina contract law, the legal consideration in a real estate purchase agreement is the buyer's promise to pay the purchase price in exchange for the seller's promise to convey title — not the earnest money deposit itself. Earnest money is evidence of good faith and secures the buyer's performance, but it is not the contractual consideration. Therefore, even if the earnest money check is never delivered, the mutual exchange of promises (buyer promises to pay; seller promises to convey) constitutes sufficient consideration to support the contract.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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