I have a contract to buy real estate. The contract is a simple one page document that the Seller and I wrote up ourselves. We left out the date for closing and some other matters which my seller says makes the contract invalid and un-enforceable. Is he right?
Creation of a contract requires meeting of the minds on all essential terms. A contract can be oral or in writing, but the Statute of Frauds requires certain contracts be in writing to be enforceable. Those contracts include purchase and sale of real estate, contracts involving goods priced at $500 or more, leases for longer than one year or any contract which cannot be performed within one year.
A contract is valid by offer, acceptance and consideration. As long as there is mutual assent on the essential elements of a contract, the contract will be binding even if other terms are omitted or ambiguous. What are essential terms and what may be implied or supplied outside of the contract will vary depending upon circumstances and subject matter.
Essential terms usually include identity of the parties, subject matter of the contract and nature or amount of the consideration. Courts can supply omitted terms by reference to governing law or even local custom and practice. If the terms are so vague or incomplete that is impossible to determine intent of the parties the claimed agreement is unenforceable.
Creation of a contract starts with an offer. The offer is terminated by revocation or withdrawal prior to acceptance, rejection by the recipient, lapse of time or death of a party. An offer which does not have a definite time for acceptance remains open for a reasonable period of time. Reasonable is always dependent on circumstances and subject matter. Even when an offer includes a term keeping it open for a certain period of time, the person making the offer can still usually withdraw the offer as long as it has not been accepted and acceptance communicated to the offeror. The terms of the offer can limit the manner by which the offer may be accepted. If any event, acceptance must be communicated to the offeror to be binding.
In one circumstance an offer cannot be withdrawn, even if acceptance of the offer has not been received by the offeror. If acceptance by mail is authorized, a contract is complete as soon as the acceptor deposits the acceptance in the post office directed to the offeror's proper address and with postage prepaid, provided the acceptance is timely.
In a real estate contract, essential terms are usually considered to be an unambiguous description of the property, identify of the parties, and consideration being paid. Florida courts have held in various cases that nonessential terms include the manner of conveyance, warranties to be given in the deed, who pays closing costs and documentary stamp taxes on the deed, who is responsible for obtaining a title report or title insurance and who is responsible for maintaining insurance on the property until closing.
In most contracts, even the time for performance is not essential. Where time to perform is not specified, the court will imply a reasonable time for performance. For real estate sales, the reasonable time for performance is triggered by demand from one party to the other.
Even when a contract has incomplete blanks, the blanks are not fatal. That issue was addressed in the case of Innkeepers International, Inc.
Innkeepers involved a dispute over a management contract for a motel being built. The contract did not have a starting date, but the court ruled the starting date could not be set at time of contract. The court found the parties agreed that commencement of performance depended on construction completion date, so the contract was valid.
The court then addressed blanks in the agreement. It noted the Florida Supreme Court had held a contract should not be void for uncertainty unless there is no other way out and that indefiniteness has reached a point where construction becomes futile. Accordingly, the court ruled that the blanks could be completed by determining the intent of the parties at the time of the contract. And, because the blanks created an ambiguity, the court could accept testimony as to that intent.
The better practice is to draft an agreement that addresses all issues and concerns. That is best done with an experienced attorney. When the parties chose to forego legal advice and create their own document, the door is opened to future disagreement, litigation and uncertainty. Next time, hire an attorney.