Buyer Priya submits an offer on a Chattanooga property with an acceptance deadline of Friday at 5 PM. On Friday at 4:45 PM, the seller's broker calls Priya's affiliate broker and verbally states that the seller has accepted. The seller's signed acceptance is not emailed until Saturday morning. Under Tennessee law, which of the following is most accurate?
Correct Answer
B) A binding contract was formed on Friday at 4:45 PM when verbal acceptance was communicated within the deadline
Under Tennessee law, acceptance can be communicated verbally by an authorized agent (the seller's broker) acting within the scope of their authority. The verbal communication of acceptance at 4:45 PM Friday — before the 5 PM deadline — is sufficient to form a binding contract. The subsequent written confirmation is documentation of what already occurred, not the event of contract formation. Tennessee does not require the physical delivery of a signed document to complete acceptance when verbal communication has been made by an authorized agent.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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.
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