Contracts
What is a 'bilateral contract' in the context of a Rhode Island real estate purchase agreement?
AA contract signed by only one party
BA contract in which both parties exchange promises and each is obligated to perform✓ Correct
CA contract negotiated between two brokers
DA contract involving two separate properties
Explanation
A bilateral contract involves mutual promises—both parties promise to perform. A purchase and sale agreement is bilateral: the buyer promises to pay and the seller promises to convey the property.
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Key Terms to Know
Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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