An affiliate broker in Knoxville represents the buyer and presents an offer to the listing agent on Monday at 10 AM. The listing agent presents the offer to the seller, who signs the acceptance at 3 PM Monday but does not contact the buyer's affiliate broker until Tuesday morning. When was the contract formed?
Correct Answer
A) Tuesday morning, when the seller's acceptance was communicated to the buyer's affiliate broker
Under Tennessee contract law, a contract is formed when acceptance is communicated to the offeror or the offeror's authorized agent. The seller signing the acceptance at 3 PM Monday is necessary but not sufficient — the acceptance must be communicated. Since the buyer's affiliate broker (the buyer's authorized agent) did not receive notice of the acceptance until Tuesday morning, that is when the contract was legally formed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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