Are emailed offers legally binding?

[Alex_1]

Hi all,

I realise the traditional way to make an offer on a property is to have the agent draw up a formal offer document which, if the seller accepts and signs it, creates a formal legal contract.

However, in the very early stages of a negotiation when there's likely to be lots of 'going back and forth' on price, terms, etc, is there any harm or legal risk in just emailing offers to the agent (that is, doing the negotiations by email rather than verbally)? I assume that an emailed offer is not a legally binding document... is it?

For example, if I emailed the agent and said something like "Dear Sue, I'd like to make an offer of $X for the property at [address], subject to the following conditions...", this email doesn't constitute a legally binding offer, does it?

Once the parties have reached general agreement, then a proper formal offer can be drawn up.

My understanding is that nothing actually becomes legally binding until both parties have signed and executed a proper contract... but I just wanted to double-check this.

 

[alexlee]

For example, if I emailed the agent and said something like "Dear Sue, I'd like to make an offer of $X for the property at [address], subject to the following conditions...", this email doesn't constitute a legally binding offer, does it?

Once the parties have reached general agreement, then a proper formal offer can be drawn up.

My understanding is that nothing actually becomes legally binding until both parties have signed and executed a proper contract... but I just wanted to double-check this.

No harm in making offers, but nothing is binding until both sides sign the contract.
Alex

 

[Terryw]

Contracts don't have to be in writing to be binding. The one exception is contract dealing with land (buy/sell/lease). These sorts of contracts need certain particulars to be enforceable one of which I believe is a signature.

 

[grossreal]

hi all
the wa guys maybe able to clarify this.
but they have for me
a bit of a funny system (I have got to understand it but its very unusual for the east coast people).

if you make an offer it is binding on the offerer and if the vendor agrees
you are locked into the contract at the point of offering.
so say you say I want to buy your house at 200k to a real estate and it is a formal offer( and that can be an email, text message or fax )
they will ask if thats a formal offer and if the answer is yes
then you are locked in to buy if the vendor accepts your offer.
this is very different to nsw where you put in an offer
its accepted and then you have to put a deposit down sign a contract and only then it is accepted.
in nsw a sale is not a sale until a contract is signed and a monitory value has been exchanged and formal exchange takes place and even then the deal can fall thru before settlement.
my understanding of wa real estate (and I am very rusty on it) is agreement to purchase is seal from the offer.
and a couple of people from wa can clarify
if I am right an email, text or fax if in the form of an offer is enforciable ( not sure if there has been any cases that it has been enforced)
it has always been the case that as long as more the 3 people are present and an agreement has been stuck then it is enforcable, this is standard common law.
real estate is very different in nsw
as real estate is one commodity that this rule does not apply to
and is only enforcable if
A the contract is signed
and B a monitory value has been exchanged ( that monitory value has change very recently as it has been allowed to be not only a coin or note value but a recognisable exchangeble commodity( trade dollars))
I would ask both wa legals and qld legals before making lots of offers in both those regions as there rules for real estate are very different

 

[wylie]

My understanding is that in Queensland a contract has to be signed by both parties in order to be a legal contract.

We looked at a house that had a verbal offer on a Saturday of $330K (eight years ago) which had been verbally agreed to by the solicitor winding up a deceased estate, but contracts could not be signed until Monday. It was a deceased estate with three beneficiaries. We signed a contract on the Sunday night for $345K but the principal of the real estate office would not present it with the original offer (which probably would have possibly had a contract drawn up by that stage) because the original verbal offer buyers were both solicitors and told the principal they would sue her if they were gazumped.

We took advice, and that advice was that until a contract is signed by both parties (in Queensland anyway) it is NOT a binding contract.

In the normal course, in this situation, BOTH contracts would be presented together, similar to the situation with a sale by tender, and the vendor would chose which suited them (ours was cash, clean and unconditional and for an extra $15K).

Except it was a family member who was the agent in this case and we didn't want to escalate the situation, we would have certainly contacted the three beneficiaries to let them know the agent had stiffed them.

The principal of this real estate office was just weak and ineffectual and we lost our "dream house", but of course another one came up soon after.

Wylie

 

[geoffw]

hi all
the wa guys maybe able to clarify this.
but they have for me
a bit of a funny system (I have got to understand it but its very unusual for the east coast people).

if you make an offer it is binding on the offerer and if the vendor agrees
you are locked into the contract at the point of offering.

Like Queensland. This is what happened when I sold.

The buyer makes an offer. The contract is faxed to the vendor.

The vendor does not accept- they make a counter offer, in writing, on the one page of the faxed contract which has prices. They initial the counter offer, and fax back that one page.

In my case, there were several offers back and forth before we reached an acceptable price.

When that price was accepted, and initialled, by both parties, exchange was deemed to have taken place.

 

[Kenster]

...there were several offers back and forth before we reached an acceptable price.

When that price was accepted, and initialled, by both parties, exchange was deemed to have taken place.

Under contract law, a validly formed contract must be accompanied by a consideration, which normally is a money deposit.

Without a consideration, the contract is not properly formed.

Can someone with working knowledge of the Sale Of Land Act clarify this?

Thanks.

 

[geoffw]

Under contract law, a validly formed contract must be accompanied by a consideration, which normally is a money deposit.

Without a consideration, the contract is not properly formed.

Can someone with working knowledge of the Sale Of Land Act clarify this?

Thanks.

There may well have been the requirement for the buyer, upon agreement of price, to have have provided a deposit- the same as there is upon "settlement" in other states (although settlement is deemed to have take place at a different stage).

There probably was, although this was not something which I, as the sellsr, saw.

 

[ggumpshots]

Under contract law, a validly formed contract must be accompanied by a consideration, which normally is a money deposit.

Without a consideration, the contract is not properly formed.

Can someone with working knowledge of the Sale Of Land Act clarify this?

Thanks.

Consideration need not be money in contract law.
Consideration is something for something.....eg I work at a company and in exchange i get a salary

It is irrelevent that money is normally used as a deposit.......personally I would be reluctant to take a herd of cows as a deposit unless I was a farmer.
May I suggest that you are incorrectly transposing your knowledge of contract law to contracts which involve the sale of land .
Land is a special case.
This seems to vary significantly from state to state. sorry I cant be more helpful

 

[pete_w]

first of all, im not a lawyer.

i would say that in general, if you make an offer via email, and its accepted, you have entered into a legally binding agreement. you can withdraw your offer before it is accepted and thats ok. if they turn round and give a counterbid, your original offer no longer counts. they have given you an offer, and its up to you to accept. they can withdraw that offer before you accept, but if you agree thats it.

with houses its probably different becuase the written contract will specify all the terms, and by signing it you are agreeing to all those terms. agreement on price is not the same to agreeing to all the terms in the contract. agreement to all the terms happens when you sign the contract, or somehow communicate to the other party that you agree to all the terms in the contract. so from a legal point of view, if you reach agreement to price, then the contracts get sent out, the original agreement is void, and the contract would form a new offer to be accepted or rejected.

from what i learnt you need consideration to have a valid contract but you can still enter into a legally binding agreement before signing a contract. you dont have to tender consideration when you accept an offer, it just has to be part of the terms of the contract.

for instance, if you offer a price to someone over the phone, and they accept that price, you've entered into a legally binding agreement, as long as the terms constitute a legal contract (consideration, intention etc). likewise for agreement over email. you can withdraw your offer before you've had acceptance, but once they communicate to you their accpetance, that's it.

if you submitted your offer via email, then acceptance of that offer via email would be legally valid. if you said in your email 'acceptance must be by post or fax', then email acceptance probably wouldn't count.

the problem comes from trying to prove there was an agreement in the case of a dispute. if two parties agree with something over the phone, and one backs out, it becomes a he says/she says. this is where having a signed contract saves you.

this conflicts with what gross says, but is what i learnt when studying contract law. there is no "contract law legislation" per se, its mostly been derived from cases in courts. so its likely that it could vary between states.

the long and the short of it is dont agree to anything unless you're 100% sure.

 

[pombonted]

Email offer - contract?

Quickest answer - it varies by State. Which State are you dealing with?

For example: In Vic a contract is legally binding under the Sale of Land Act ONLY once specific conditions have been met ie exchange & signed legal Section 32's etc then exchange of formal contracts - formal written offer & acceptance that complies with legislation (original signatures required from authorised parties from BOTH sides) AND a token monetary exchange ie. a deposit of $1 minimum to be paid in good faith with the offer.

I'm a bit rusty these days, but let me know if I can help further with any specifics, I'll dig out the info....I'm getting myslf back into property mode

So in answer to your question: if you sent an email to an agent in VIC for a property you saw on the internet saying that you would like to make an offer of $200k, then the answer is NO. The agent/vendor must provide an original signed legal Section 32 to you that you also must sign, varifying that you have received the nformation that is specified to be disclosed by the Vendor for an offer of sale to occur. This MUST be done before they can accept any official offer ie. a legally binding offer. There are also cooling off periods for properties under a certain value, even if you have signed all the appropriate legal paperwork. eg. from memory, VIC has a three day cooling off period for offers under $250K. Do not forget the deposit though, as a monetary exchange MUST take place for the contract to be binding by law, and if you COOL off, you will lose your deposit.

 

[Kristine..]

Under contract law, a validly formed contract must be accompanied by a consideration, which normally is a money deposit.

Without a consideration, the contract is not properly formed.

Can someone with working knowledge of the Sale Of Land Act clarify this?

Thanks.

Hi Kenster

'consideration' in a contract is not the deposit.

The 'consideration' is that which is given in exchange for the thing which the contract is for

For example, a lease must have a 'consideration', and the tradition was an annual rent of one peppercorn (from the local peppercorn tree). Hence the saying 'paying a peppercorn (trifling) rent'.

Many people confuse the payment of consideration to be paying a deposit. It is not. Contract law as it pertains to the sale of land does not require a deposit (partial payment), however where a deposit is negotiated between the parties it can be any amount but is not required by law to make the contract binding.

Lots of real estate changes hands without any money being paid eg exchanging or 'swapping' land. This does not make the contract any the less binding.

With reference to the original question, I do not believe that electronic ie emailed offers have been found to be legally binding as they do not contain a signature which cannot be altered.

No contract exists between the parties until each has signed the contract however traditionally the signatures do not have to be on the same piece of paper. In many rural areas the buyer signs the contract and the vendor signs the contract and the contracts are duly exchanged but neither party signs both copies of the contract. This does not matter much if the matter is between the parties however the lenders would usually a copy of a fully signed contract of sale to approve the loan. Usually, but not always. for the FHOG, the State Revenue Office requires one copy of the contract and for that copy to be signed in ink by both parties.

So the level of proof of contract varies depending on the application of the contract, but until the contract is signed and exchanged the legal requirements for a sale have not been met.


As has been mentioned, not all contracts are required to be in writing. Many contracts are not, but if a contract is to run longer than a year it needs to be in writing, and for the sale of land the Instruments Act has a set of specific requirements in order to enact a valid, legal and binding contract.

Hope this helps

Kristine

Licensed Estate Agent (Victoria)

 

[Firsthomelooker]

Just to make this thread more complete for future reference - I only know about NSW & ACT but any 'offer' is not legally binding until contracts have exchanged. In the ACT & NSW two identical contracts exist, one signed by the vendor and one signed by the purchaser. At exchange these contracts are 'swapped' so the vendor holds the purchaser signed contract and vice versa.

And to clarify on a few other points: Consideration is the full purchase price, not the deposit. In ACT & NSW if you exercise the cooling off period you loose something like 0.25% of the purchase price, if you default you loose 10% if purchaser (even if less is paid upfront as a deposit) or pay damages if vendor.

>>I'm a law student & conveyancing clerk/paralegal

 

[Terryw]

Here are some notes on contracts and Land:

Contracts can be entirely oral and still be enforceable. But in all states of Australia contracts concerning the sale, lease or other disposition of land must be evidenced in writing for the contract to be enforceable. ie you could still have a oral contract for land, but you just could not enforce it.

The requirement for writing is outlined in s54A of the Conveyancing Act 1919 (NSW). In QLD it would be s56 of the Property Law Act 1974.

The contract for land must contain at least 3 items, the 3 ps:
1) Parties identification
2) Property, desciption to identify the correct peice of land (DP numbers, address etc)
3) Price

The document must also be signed. But the name could be handwritten, printed or even typed (Durrell v Evans (1862)).

The contract may also be in or over several documents (Harvey v Edwards Dunlop (1927)). eg. name omitted in main contract but on the envelope as in Peace v Gardiner.

If the vendor only owns one piece of land, referring to it as 'the land' may even suffice as identification (Pirie vSaunders (1961)).

Including and signing a deposit cheque may also satisfy the requirement for a signature and identification of a party to the contract. (due to the physical connection).

Even if there is an absence of writng, one party may still have a claim if it can be shown there were sufficent acts of part performance.

Reference:
"Essential Contract Law"
"Contract Law: Butterworths Questions and Answeres".

ps. I am not a lawyer

 

[grossreal]

hi all
i will throw another issue that is interesting to me.
in that
you can advertise commercial real estate and strike a deal without a contract at all
and the real estate agent does not have to supply a copy of the contract until the agreement is in place this is only for commercial real estate.
and thats in nsw.
not sure other state dazzling may have an input for wa.
just to add a different area to the post.
my last problem one took me 3 months to just get the contract and hens teeth pulling to get it .

 

[Andrew_A]

I made a verbal offer through an agent in January for a house I liked, something I wouldn't do again. It would have been better I think if I had submitted the offer straight away as a signed contract with number attached, I suspect that will have more impact with a seller as it's much closer to real money and the agent has less room to play games.

As it was I didn't feel like I could submit an offer for the 'rejected' verbal price, or something lower so was trapped a bit when I tabled my first offer.

Talking directly to the seller is a powerful technique as well.