New York Real Estate Salesperson ExaminationContractsMedium
A buyer and seller agree verbally to the sale of a parcel of land for $250,000. They shake hands and agree to meet next week to sign the formal written contract. Before the meeting, the seller receives a higher offer and decides to sell to the new buyer. The original buyer attempts to sue the seller for breach of contract. What is the likely outcome?
- AThe original buyer will win, as a verbal agreement is binding.
- BThe seller will be forced to sell to the original buyer due to mutual assent.
- CThe seller is liable for damages, but not for specific performance.
- DThe original buyer will likely lose due to the Statute of Frauds.
Show answer & explanationAnswer & explanation
Correct answer: D. The original buyer will likely lose due to the Statute of Frauds.
The Statute of Frauds requires certain contracts, including those for the sale of real estate, to be in writing to be enforceable. A verbal agreement for the sale of land, without a written document, is generally unenforceable.
Why the other options are wrong
- A. While some verbal agreements are binding, contracts for the sale of real estate are a specific exception under the Statute of Frauds.
- B. Mutual assent exists, but enforceability for real estate requires a written agreement due to the Statute of Frauds.
- C. Without an enforceable contract, there is no basis for liability for damages or specific performance.
Statute of Frauds
A legal principle requiring certain types of contracts, such as those involving real estate, to be in writing to be legally enforceable.
- Prevents fraudulent claims.
- Applies to contracts for sale of land, leases over one year, etc.
- Requires a written memorandum signed by the party to be charged.
Memory trick: Written land deals prevent legal sand traps.