Buyer Chen submits a written offer to purchase a home in Columbia, South Carolina. The seller, responding through their agent, issues a written counteroffer. Chen's agent, acting without explicit authorization, signs the counteroffer on Chen's behalf and returns it to the seller's agent, stating that Chen has accepted. Chen later denies authorizing the agent to sign on his behalf. The seller insists a binding contract exists. Under South Carolina law, which statement most accurately describes the legal situation?
Correct Answer
C) No binding contract exists because a real estate agent in South Carolina does not have authority to sign a real property contract on a client's behalf without specific written authorization.
Under South Carolina law, a real estate agent does not have implied or inherent authority to execute (sign) a real property purchase contract on behalf of a client. The authority to bind a principal to a real estate contract must be specifically granted — typically through a written power of attorney or explicit written authorization. Because Chen did not authorize the agent to sign the counteroffer, the agent's signature does not bind Chen. The Statute of Frauds (S.C. Code Ann. § 32-3-10) requires that real property contracts be signed by the party to be charged or their duly authorized agent. Without proper authorization, the agent's signature is ineffective and no binding contract is formed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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