Buyer Leon submits an offer on a Jackson, Tennessee property. The seller accepts the offer in writing and Leon's affiliate broker is notified on Wednesday. On Thursday, the seller's attorney discovers a title defect and the seller calls Leon directly to say the deal is off. Under Tennessee law, which of the following is most accurate?
Correct Answer
B) Leon may hold the seller to the contract or sue for damages because a binding contract was formed upon communication of acceptance
Once the seller's written acceptance was communicated to Leon's affiliate broker on Wednesday, a binding contract was formed under Tennessee law. The seller cannot unilaterally rescind a valid contract simply because a title defect is discovered afterward. Leon has the right to enforce the contract (specific performance) or seek damages for breach. The title defect is a seller's obligation to cure or disclose — it does not give the seller the right to walk away from the contract.
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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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