Frequently Asked Questions

Legal Hotline FAQ

a blog of the most frequently asked questions to the MAR legal hotline.


Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

How is the “Date of Contract Acceptance” in the MAR Residential Contract established?

These are frequently asked questions on the Legal Hotline and the source of considerable confusion.First, a bit of background.
Under Maryland law, there are five essential elements in the formation of a contract: capacity of the parties; legality of object; consideration; offer and acceptance (the so-called “meeting of the minds); and delivery. 
The Date of Contract Acceptance is the date when the last required named party has executed or initialed any and all provisions of the contract of sale or amendments. At that point, Contract Acceptance is completed.  In other words, the day the last named party has signed or initialed all of the required provisions, including amendments, there is the required “meeting of the minds.”
Your second question really involves the last required element for contract formation – delivery - and the short answer is: It depends.  In Maryland, delivery is the communication of acceptance, which may be accomplished by acts as well as by words. The theory is that one cannot breach a contract that one does not know exists. This is why delivery is the final required element of contract formation.
Some believe that there is no enforceable contract until the fully executed document has been physically delivered to the other party, but this is not the law in Maryland.  Acceptance may be accomplished by words.  If a listing agent presents an offer that the seller accepts and the listing agent, with the signed offer in her possession, contacts the buyer’s agent and says “Congratulations, the sellers have accepted the buyer’s offer!” that is communication of acceptance and that is delivery under Maryland law, creating an enforceable contract.  (It is a best practice never to contact the party or agent to verbally acknowledge acceptance of an offer unless you actually have in your possession the fully executed contract.)
The MAR Contract of Sale refers to “Date of Contract Acceptance,” not “date of contract” or “date of contract formation.”  The reason is that delivery (i.e., communication of acceptance) must be accomplished before there is a valid contract. There is no practical way to include in the contract a reference to the date of contract delivery, which would require the parties to execute an additional paragraph to agree upon the date of delivery.
Therefore, the date of Contract Acceptance is the date of the “meeting of the minds.” Delivery (contract formation), on the other hand, is the date that the seller, buyer, or agent communicates acceptance, hits the send button on a fax machine or clicks the mouse to send the email.  Your question hinted that these could be two different dates, and that is absolutely a possibility.  Again, best practice is not to communicate contract acceptance until the fully executed agreement is in hand and to deliver the contract the same day. 
I know what you’re thinking: If one party accepts the offer or counter-offer, that is the date of contract acceptance. If the agent is remiss in communicating the acceptance to the other party’s agent, the clock is already ticking for contract performance.  I admit that the disconnect between contract acceptance and contract formation could create problems if an agent fails to perform his duties, but following the practices I describe will avoid these pitfalls.
 


Comments are closed.