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If the parties to a contract have agreed upon all material terms, it may be inferred that the purpose of a final document which the parties agree to execute is to serve as a polished memorandum of an already binding contract.
Plaintiff John J. McCarthy, Jr. executed a pre-printed offer to purchase real estate (OTP) form containing all the material terms of his deal with defendant Ann G. Tobin. The OTP also included a provision requiring the parties to execute a standard form purchase and sale agreement within seven days. The parties' attorneys negotiated through several drafts before agreeing on a final draft 10 days after the stated deadline. Before plaintiff delivered the executed agreement, defendant accepted intervenors' offer to purchase the property. Before defendant and intervenors' deal was closed, plaintiff filed suit seeking specific performance and damages. When the trial court's judgment in favor of defendant and intervenors was vacated on appeal, intervenors sought further appellate review.
Was the OTP a binding contract between plaintiff and defendant, thereby warranting the grant of the remedy of specific performance in favor of the plaintiff?
The appellate court affirmed the appeals court decision because the offer to purchase real estate was a firm offer that became a binding contract on the parties when defendant accepted it. The court ruled that the purchase and sale agreement was to serve as a mere polished memorandum of an already binding contract where the parties had already agreed on the binding terms. Moreover, the deadline was a condition subsequent that was waived by the parties' words and conduct.