Is there a binding contract if the Settlement Date is left blank?

QUESTION: Yesterday, I notified a buyer’s agent that my seller had accepted his buyer client’s offer. However, two things have happened since then. First, I have realized that the Settlement Date in the contract is blank. Second, I have also just heard from another buyer’s agent that her buyer is interested in making an offer on the property.  Since there hasn’t been a “meeting of the minds” on all terms, I don’t think the seller is under contract and that he can therefore consider other another offer. Do you agree?

ANSWER: Not necessarily. You are correct that as a general proposition the parties to a contract have to agree on all essential terms in order to make it legally binding. However, it is also true that when the parties have clearly intended to enter into a contract but have not agreed on an essential term, a term which is reasonable may be supplied by a court in order to “save” the parties’ bargain. North Carolina courts have routinely applied the principle that “when no time is specified in a contract for the performance of an act or the doing of a thing, the law implies that it may be done or performed within a reasonable time.” To determine what would be a reasonable time for performance, a court would take into account the situation of the parties, the subject matter of the contract, and all the surrounding circumstances. It is therefore possible that a court might supply a Settlement Date in the contract in question, so we think would be a mistake to conclude that the contract is necessarily unenforceable because the parties haven’t agreed on a Settlement Date. If your client wants to consider another offer, it is your ethical duty to recommend that he first seek advice from legal counsel. See Standard of Practice 1-7 of the REALTOR® Code of Ethics.

Please don’t read this to mean that if the agents in a transaction don’t take reasonable care to ensure that all the blanks in a contract have been filled in, it’s no big deal. It is a big deal! The agents’ inattention creates potential uncertainty between the parties. Also, it could subject an agent to discipline by the Real Estate Commission for being unworthy or incompetent to act as a real estate broker, or by his or her association of REALTORS® for violating the Code of Ethics. Among other things, Article 9 requires REALTORS® to “assure whenever possible that all agreements related to real estate transactions…are in writing in clear and understandable language expressing the specific terms, conditions, obligations and commitments of the parties.”