Contracts, Offers, Contingencies & Remedies

A contract requires legally sufficient parties, consent, a lawful object, and consideration where required. Real-estate exam questions often test whether there was a valid offer, acceptance, communication, and compliance with writing requirements.

Contract formation generally requires parties with capacity, mutual consent, a lawful object, and consideration or another legally recognized basis for enforcement. A real-property exam problem often turns first on whether the parties actually agreed to the same terms and whether an authorized acceptance was communicated. Do not begin by assuming a breach simply because one party later refuses to proceed.

A writing requirement is a separate question from formation: an agreement may have been reached but still face an enforceability defense under the Statute of Frauds. Conversely, the existence of a signed document does not cure a lack of consent, authority, or lawful purpose. Analyze the issue in order: agreement, authority and assent, required form, performance, then remedy.

An offer creates a power of acceptance according to its terms. Acceptance must correspond to the offer; a material change is generally a counteroffer rather than an acceptance.

An offer proposes definite terms and gives the offeree a power to accept under those terms. Acceptance must be by the person entitled to accept, within the offer's time and method requirements, and without materially changing the proposal. A reply that changes price, closing date, included property, or another material term is generally a counteroffer rather than an acceptance.

A counteroffer ordinarily terminates the original offer, unless the parties agree to keep it open or the language otherwise shows no rejection. Communication matters: signing an acceptance but failing to deliver it as required may not form the contract. For a real estate transaction, keep a record of when offers and acceptances are transmitted and follow the stated delivery method and deadlines.

Consideration is the bargained-for legal value supporting a promise. It does not have to equal market value. The adequacy of consideration and the existence of consideration are different questions.

Consideration is bargained-for legal value given in exchange for a promise; it need not be equal to market value. In a typical bilateral purchase agreement, each side's promise supplies value: the buyer promises payment and the seller promises conveyance on agreed terms. Earnest money may provide evidence of commitment or be required by the contract, but it is not automatically the sole consideration supporting the agreement.

Avoid turning this into the inaccurate rule that every agreement is unenforceable unless a separate payment changes hands. California law recognizes legally sufficient consideration in varied forms, and some promises may be enforceable under other doctrines or statutory rules. For exam analysis, identify the exchange or other recognized basis presented by the facts, then distinguish existence of consideration from whether the deal was financially fair.

California Civil Code § 1624 requires a signed writing for specified agreements, including agreements for the sale of real property or an interest in it, certain leases, and specified brokerage or commission agreements. The writing must satisfy the applicable statutory requirements, including signature by the party to be charged or an authorized agent where required. A noncompliant agreement is generally subject to an enforceability defense, not automatically erased from history; statutory and equitable exceptions can apply.

The Statute of Frauds addresses evidence and enforceability for listed categories; it is not a rule that every contract must be written. For real estate, the sale of real property and certain interests commonly require a writing. California also separately lists certain real-estate brokerage agreements for compensation. Identify the category, required signature, essential terms, and party against whom enforcement is sought.

Do not overstate the consequence as 'no writing means no agreement ever existed.' A claimed oral agreement may have been formed but be unenforceable under the statute unless an applicable exception or doctrine applies. The DRE reference book discusses partial performance and full performance, but these are fact-sensitive legal doctrines, not automatic shortcuts. Agents should document terms in required written form rather than promise an exception will rescue a transaction.

A contingency makes a party's performance or contractual rights depend on a stated event or condition. Financing, appraisal, inspection, title, and sale-of-other-property contingencies must be read according to their actual language and deadlines.

A contingency makes a contractual right or obligation depend on an event or condition stated in the agreement. Financing, appraisal, inspection, title, and sale-of-other-property clauses vary by wording; each should identify the relevant standard, responsible party, deadline, and required notice or action. A contingency is not a universal option to cancel whenever a party changes their mind.

A party who wants to rely on a contingency should follow the contract's notice and timing requirements and avoid assuming that silence extends a deadline. Some agreements permit removal, waiver, or cancellation under specified conditions. Explain the practical consequence of a missed date without predicting the legal outcome where the contract language or applicable law is unclear.

Assignment transfers contractual rights; delegation transfers performance duties. A novation substitutes a new party or obligation with the required agreement and releases the replaced obligation according to its terms.

Assignment transfers a party's contractual rights to another person; delegation transfers responsibility for performing duties. Whether the contract permits either, and whether consent is required, depends on the agreement and applicable law. Even when an assignment is allowed, the original party is not automatically released from its obligations.

A novation requires the necessary agreement to substitute a new party or obligation and release the replaced obligation according to the parties' intent. Do not infer a novation merely because the other party knows about an assignment or accepts performance from a substitute. Clarify who remains liable, what rights transferred, and whether the original party has been expressly released.

An option gives the option holder a contractual right to purchase or lease on specified terms within the option period. A right of first refusal generally gives its holder a chance to act when the owner decides to transact under the triggering terms.

An option gives its holder a right, but not an obligation, to purchase or lease on specified terms during a stated period. The option should identify the property, price or method of determining price, exercise procedure, and deadline. The holder must exercise it as required; merely expressing interest or negotiating after expiration does not necessarily preserve the right.

A right of first refusal is different: it generally gives the holder an opportunity to match or act on specified terms after the owner decides to transact under the triggering conditions. It is not necessarily an immediate right to force a sale. Both are contract rights, not present ownership, and their operation depends heavily on precise language and triggering events.

Potential remedies can include damages, rescission, restitution, or specific performance depending on the contract, breach, and applicable law. Liquidated-damages provisions are governed by specific rules and should not be treated as automatic penalties.

A breach occurs when a party fails to perform a contractual duty without a sufficient legal excuse. Possible remedies include damages, rescission, restitution, or specific performance, but the available remedy depends on the agreement, facts, and law. Real property is often considered sufficiently unique for specific performance to be possible, but it is not automatic; a court evaluates the legal requirements and equitable circumstances.

A liquidated-damages clause attempts to set damages in advance. California imposes specific requirements, including a statutory framework for certain residential transactions; a clause is not necessarily enforceable merely because the parties signed it. Identify the transaction type, contract language, statutory requirements, and whether the sum functions as a reasonable estimate rather than an impermissible penalty. A broker should not promise a deposit will be forfeited automatically.