Contract formation and enforceability

California contract law begins with capable parties, mutual consent, a lawful object, and sufficient consideration. A contract is a legally recognized agreement to do or refrain from doing something. A signed document can be evidence of an agreement, but signatures alone do not make an illegal purpose lawful or establish that the person signing had authority.

Capacity concerns the legal ability to contract. Age, mental capacity, entity authority, and representative authority can matter. An unemancipated minor cannot delegate power or independently contract concerning real property under Family Code section 6701. An emancipated minor has adult capacity for specified property and contractual acts under section 7050. A minor can nevertheless receive title by gift or inheritance; owning property differs from having authority to contract to sell it. When a trustee, corporate officer, or attorney-in-fact signs, verify both identity and authority for that transaction.

These are stipulated legal facts for an exam, not diagnoses an agent may infer from age, disability, or an unfavorable decision. An isolated imprudent purchase does not alone prove section 39's presumption. Sections 38, 39, and 40.

Consent must be mutual and legally meaningful. The parties must agree to sufficiently definite terms, and problems such as fraud, mistake, duress, or undue influence can undermine consent. Lawful object means the promised activity and purpose must be permitted by law. Consideration is the bargained-for exchange of a legal benefit or detriment. It need not be a cash deposit or equal the property's market value.

In a bilateral contract, each side exchanges a promise. A typical purchase agreement exchanges the buyer's promise to pay with the seller's promise to transfer property on agreed terms. Those promises can supply consideration even if no earnest money has yet changed hands.

In a unilateral contract, acceptance occurs through the requested performance. Brokerage textbook examples sometimes classify an open listing this way because compensation is earned by producing the specified result. The actual agreement controls; the label is less important than knowing what constitutes acceptance or performance.

An executory contract still has obligations to perform. An executed contract, in the performance sense, has been fully performed. "Executed" can also mean signed in ordinary document language. Determine the meaning from context: a signed purchase contract can remain executory until the parties fulfill their obligations.

Earnest money shows commitment and is handled according to the agreement and trust rules. It is not automatically the consideration necessary for every purchase contract. Failure to deliver an agreed deposit may be a breach, but that issue is different from whether the parties initially formed an agreement supported by exchanged promises.

An offer communicates a willingness to enter a sufficiently definite agreement on specified terms. A listing price generally invites offers; it is not ordinarily a promise to sell to the first person who offers that number. An offer should identify the parties, property, price or determinable consideration, and material terms with enough certainty to enforce the bargain.

Acceptance must match the offer rather than introduce a material change. If the seller accepts $650,000 only on condition that the buyer remove the financing contingency, the response is a counteroffer, not an unconditional acceptance. The original offeror must accept the new proposal before it becomes an agreement.

Communication rules and the offer's stated method matter. Under Civil Code sections 1582-1583, conforming acceptance is ordinarily communicated when placed into the prescribed or reasonable course of transmission. An offer can instead expressly require receipt. Compare: proper mailing on Thursday can satisfy an authorized-dispatch condition; the same mailing received Saturday fails a stated Friday-receipt condition. Do not replace the offer's actual condition with a memorized mailing rule. Section 1583.

An offer can end through rejection, counteroffer, expiration, effective revocation, or other legal events before acceptance. A mere inquiry, such as asking whether the seller would consider an earlier closing, need not be a counteroffer rejecting the original offer. Distinguish a question from an insistence on changed terms.

Revocation is a communication issue, not simply an internal decision. For an ordinary revocable offer, distinguish deciding to withdraw from communicating an effective withdrawal before acceptance becomes effective. An express receipt condition can decide the sequence. A note in the buyer's private file saying "cancel" does not establish that the seller received a withdrawal.

An ordinary offer generally can be revoked before effective acceptance, even if it states an expiration date, unless a binding option or another legal rule limits revocation. The expiration date tells the offeree the outside acceptance period; it does not necessarily purchase an irrevocable commitment.

An option supported by the required consideration and formalities is different. The optionor agrees to keep the opportunity available on its stated terms for the option period. The optionee ordinarily has a choice to exercise, not an obligation to buy. Exercise must comply with the option's terms, including timing and method.

When analyzing a fast-moving negotiation, make a timeline. Identify each offer, counteroffer, receipt, acceptance, and revocation. A document's preparation date alone does not establish when legal communication occurred. The agent should keep records that allow the sequence to be reconstructed.

A void agreement has no legal force from the start, as with a bargain whose object is unlawful. A voidable agreement can be avoided by a protected party because of circumstances such as legally significant fraud or incapacity. Until properly avoided, it may have legal effect. A party entitled to avoid an agreement may also affirm it where the law permits.

An unenforceable agreement encounters a legal barrier to judicial enforcement. Failure to satisfy an applicable statute of frauds is the familiar real estate example. A statute of limitations can also bar a remedy after the allowable period. Do not confuse the statute of frauds, which concerns required evidence of certain agreements, with a statute of limitations, which concerns when an action must be brought.

Courts sometimes apply doctrines such as part performance or estoppel to particular facts. These exceptions require legal analysis. They are not a reason for a licensee to recommend relying on an oral land transaction when the ordinary rule requires a sufficient writing.

California's statute of frauds generally includes real property sales, leases longer than one year, agreements not performable within one year by their terms, and specified real estate employment agreements for compensation. A qualifying writing must be signed by the party against whom enforcement is sought or that party's properly authorized agent.

An agreement for a one-year lease is not automatically covered by the rule for leases longer than one year. However, another writing rule can apply. A lease beginning far enough in the future may be incapable of full performance within one year from the date the agreement is made. Analyze both duration and timing instead of memorizing a single word.

Electronic signatures and retained electronic records can satisfy applicable writing and signature requirements when the governing law and agreement allow them. Authentication, intent to sign, consent to electronic dealing, and retention matter. California specifically restricts reliance on ephemeral text or instant messages as a contract conveying real property without the required written confirmation. A casual message is not interchangeable with a completed, retained purchase agreement.

Validity is not compulsion. For a covered transaction, an electronic record or signature cannot be rejected merely for being electronic. But the Electronic Transactions Act does not force a party to deal electronically; agreement is determined from context and conduct, and consent for one transaction need not cover another. A seller who has not agreed to electronic dealings is not compelled to accept that method simply because electronic signatures can be valid. Sections 1633.5 and 1633.7.

Buyer Emery offers $600,000 with a loan contingency and requires delivery of signed acceptance by Friday at 5 p.m. Seller Finley signs at 4 p.m. but adds that the sale is cash with no loan contingency. The document reaches Emery at 4:30 p.m.

Timely delivery does not make this an acceptance: Finley changed a material term. It is a counteroffer requiring Emery's agreement. No amount of earnest money automatically resolves the mismatch. Begin every contract question with formation, then assess required writing, authority, enforceability, and remaining performance.