Contracts
In Tennessee, a 'bilateral contract' in real estate is one in which:
AOnly the seller makes a promise
BBoth parties exchange promises to perform✓ Correct
CA third party guarantees performance
DPerformance depends on a future uncertain event
Explanation
A bilateral contract involves mutual promises by both parties. A purchase agreement is bilateral — the seller promises to convey title and the buyer promises to pay the purchase price.
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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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