The weather is warmer, flowers are abundant and the year is already in the fifth month. Time flies when you are busy with so much activity. Like busy bees we have a lot going on this month. 

The Seniors will be graduating and we want to send prayers and blessings to them all for whatever they are moving forward in.

Memorial Day is Monday the 27th and the GSMAR office will be closed to honor all the fallen heroes, loved ones and family. They may be gone from our sight but they will live forever in our hearts. 

Mother’s Day was Sunday the 12th and we’d like to give some love to all the Mothers out there. Whether they are single Moms, married, young, old, departed or any combination, as long as they have a child that they would sacrifice their all for: Mom we love you.

Lastly, for all those headed on summer vacations, be safe, be blessed and have lots of fun.

To Bind or Not to Bind 

(An article on the importance of appropriately binding a Purchase & Sale Agreement) 

By: Christopher Wood, esq.

 In order to address the necessity of why a real estate Purchase and Sale Agreement should be bound and who is the proper party to do the binding, it’s important to quickly review the basic elements of contract formation. The three most basic components in creating a legally binding contract are, Offer, Acceptance, and Consideration (i.e. what is required in exchange). There are numerous other conditions that might need to be met, such as the requisite age to enter into a contract, or the multiple methods of acceptance, or the Statute of Frauds requiring certain contracts to be written, but for the purposes of this article we will focus on the foundational three. It is also important to understand the basic positions and titles of the two most prominent parties - the Offeror is the one making an offer, and the Offeree is the one responding to an offer made. These titles could flip or change during a transaction dependent on new conditions offered and which party is offering. For example, with an offer to purchase real estate, the Buyer is the offeror making the initial purchase offer and the Seller is the offeree responding to Buyer’s offer. However should the Seller counter the Buyer’s offer, the Seller now becomes the offeror because he has extended a new offer. The controlling identifier as to which hat each party is wearing can be answered from the question, ‘who made the last offer?’ The “new” offer in the initial purchase and sale could be for something as minor as a demand for a different closing date, or the inclusion of the name of Seller’s title company - ‘who made the last offer?’ Understanding the most basic of the elements and the players in the process, we can now look at why binding the original contract is so vitally important and who carries the burden of ensuring that the document is properly bound. The leading treatise on contract law, the Restatement of the Law Second, Contracts published by the American Law Institute, holds that “the offeror is the master of his offer…” (Restatement §29) thereby controlling the method(s) of acceptance and the conditions which must be met in order for a binding contract to be created. Keep in mind that the original offer and acceptance process which creates the binding sale arrangement starts with the Purchase and Sale Agreement and all of the associated Counters, hopefully culminating with final acceptance by all parties. Once a satisfactory offer is made, the responding party must make his acceptance of the offer known to the offeror. If the negotiation is a face-to-face agreement then there is generally no question as to whether the offeree has accepted, however with the current state of electronic signings and “long distance” transactions, the need for clarity of acceptance becomes even more vital. “In the usual commercial bargain the offeror expects and receives prompt notification of acceptance, and such notification is ordinarily essential to an acceptance by promise.” (Restatement, Rationale §54). Acceptance turns on what each party knew or had reason to know. The Restatement goes on to provide in Section 68 that “a written revocation, rejection, or acceptance is received when the writing comes into the possession of the [offeror]...” The amount of time given to accept and the method of acknowledging the acceptance is guided by the terms of the maker of the offer. (Restatement §42). Realtors using the Tennessee Association of Realtors Purchase and Sale Agreement (RF401) and Counter Offer (RF651) will find that both forms provide an Acknowledgement of Receipt condition following the signature lines of the parties. This ‘Acknowledgement’ complies with the contractual requirements as addressed in the Restatement, and since included in the documents’ format, make the Acknowledgement a requisite element. The signature by the Offeror reflects that proper notification has been received - in turn the contract becomes bound, the binding date is established, and the Agreement is fully enforceable. Please note, though verbiage in the TAR forms changed in 2019 removing the defining language of ‘the last offeror’ and ‘offeree,’ the form also changed the binding provision title from ‘Binding Agreement Date’ to ‘Acknowledgment of Receipt’ - in this writer’s opinion, even further exemplifying the need to comport with the Necessity of Notification. Though there may be other methods of saving a Purchase and Sale contract when it is not properly bound, the best and easiest practice is to follow the most basic of contract principles, complying with the conditions set by the offeror(s), consider timing constraints and ensure that everyone is notified. [About the Author: Chris managed an active trial practice with licensure in North Carolina and Tennessee since 1994; He served as adjunct and resident professor at two Universities in North Carolina; Though he maintains his law license, Chris spends much of his time as an Associate Broker with Century 21 MVP in Sevierville, Tn]