Illinois real estate Contracts guide
Contract formation, validity and enforceability
A signed page does not answer every contract question. Start with what the parties actually agreed to, then check the exchange, their legal ability and authority, and any rule that limits enforcement. This keeps a formation problem separate from a later breach or a writing defense.
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The short answer
For an ordinary real estate contract, look for an offer, matching effective acceptance, consideration, sufficiently definite terms, capable parties and a lawful purpose. Check authority when someone signs for another person or entity. Then ask whether the agreement meets the applicable writing and signature requirements. A counteroffer, a protected right to avoid a contract and a defense to enforcement are different problems. Earnest money and an electronic signature do not replace that analysis.
PSI covers these subjects within national V, Contracts: 19 of 100 scored national broker questions across the whole category. This guide focuses on formation, writing and status distinctions, without a separate quota or passing target for this page. The questions are original teaching examples. A private transaction requires its actual documents, communications, governing law and facts.
Six checks before calling an agreement binding
- Identify the proposed bargain. Who is offering what to whom? A listing price usually invites an offer; it does not by itself promise a sale to every person willing to pay. Read the actual wording and context for a present commitment.
- Check objective assent and definite terms. Use the parties' outward words and conduct. The agreement must be definite enough to identify the promised performance and assess a breach. Some terms can be supplied by an applicable standard, but a court does not invent an unresolved essential bargain.
- Trace the response and its timing. Did the offer remain open, and did the response accept it as made by the required method? A response that requires changed terms is a counteroffer. Do not assume a small edit is harmless. A tentative inquiry or a permitted request concerning an existing contract needs a different analysis.
- Identify the bargained exchange. In a bilateral purchase contract, binding promises to convey and pay can supply consideration. Check a required deposit separately: was delivery a condition to formation, or an obligation under an agreement already formed? Then read the actual consequence of missing it.
- Check capacity, authority and legality separately. A person's ability to contract does not prove authority to bind a company or another owner. The particular capacity defect and protective rule matter. Read the consequence of an alleged statutory violation instead of declaring every affected agreement void.
- Check writing, signatures and enforcement. A covered Illinois land-sale agreement can require sufficient signed written evidence even when closing is soon. For electronic dealings, establish agreement to that method, attribution, required terms and any delivery conditions. Then distinguish no agreement, a valid agreement, void, voidable and a specific enforcement barrier.
| Supplied fact | Question to ask | Common mistake |
|---|---|---|
| Price appears in a property advertisement | Does the text create a definite offer or invite proposals? | Assuming every full-price response binds the owner |
| Response changes the offered terms | Was the original offer accepted as made? | Calling a small edit automatic acceptance |
| A tentative request follows an existing agreement | What does the communication and any review clause permit? | Treating every proposed amendment as rejection |
| No earnest money accompanies exchanged promises | Do promises supply consideration, and what does the deposit clause require? | Confusing consideration with one particular payment |
| A protected party has an established avoidance right | Who can avoid, on what basis and subject to what requirements? | Calling every capacity problem automatically void |
| A representative signs | What authority binds the particular principal? | Assuming adulthood, employment or a license supplies all authority |
| Covered land bargain lacks sufficient signed evidence | Does the Frauds Act bar the requested enforcement, and is an exception established? | Equating a writing defense with unlawful subject matter |
| The document is signed but closing remains ahead | Which duties remain, and what does executed mean in context? | Equating signing, validity and completed performance |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Formation and enforceability | Formation asks whether the required agreement arose. Enforceability also asks whether a rule or defense blocks the relief sought. | A writing defense and a missing acceptance are not interchangeable. |
| Acceptance, counteroffer and inquiry | Acceptance assents to the offer as made. A counteroffer requires a changed bargain. A tentative inquiry may do neither. | Read the entire communication. A label such as accepted does not decide its effect. |
| Original offer and existing contract | Before acceptance, the issue may be whether an offer was rejected. After agreement, a suggested change raises amendment and contract-clause questions. | Identify the stage before importing a counteroffer rule. |
| Consideration and earnest money | Consideration is the bargained legal exchange. Earnest money is a deposit whose timing and consequences depend on the agreement. | Exchanged binding promises can supply consideration without a universal deposit requirement. |
| Capacity and authority | Capacity concerns the party's legal ability to contract. Authority concerns a representative's power to bind someone else. | A capable adult may still lack authority to sell company property. |
| Electronic recognition and proof | The law can recognize electronic records and signatures. That does not establish that a particular person signed or that all required terms and delivery conditions were met. | A platform badge or unexplained email address is not a complete attribution analysis. |
| Valid, void, voidable and unenforceable | A valid agreement meets the applicable requirements. Void and voidable address different legal consequences; unenforceable identifies a barrier to the requested enforcement. | Use the actual governing rule, especially for capacity, illegality and remedies. |
| Signed and fully performed | Executed can mean signed in document practice, or fully performed in the exam's executed-versus-executory comparison. | A signed purchase agreement can still be executory while conveyance and payment remain. |
Work through the facts
1. The advertised price
A property advertisement gives a $400,000 price and invites interested buyers to submit offers. A buyer sends a full-price proposal and says the owner is already bound.
- The supplied advertisement invites proposals rather than promising acceptance of every matching response.
- The owner's legally effective acceptance and the other requirements still need to be established.
Answer: The price alone does not establish a purchase contract. The actual advertisement's language and the later communications matter.
2. A changed closing date
An offer specifies September 1 closing. The responding party signs a version that substitutes September 15 and makes acceptance conditional on that date.
- The response does not accept the offered performance date.
- It proposes a changed bargain that the original offeror would have to accept.
Answer: It is a counteroffer on these facts. Do not assume that calling a change small or clerical would automatically preserve acceptance under Illinois law.
3. A request without a changed acceptance
The exercise establishes timely, otherwise effective acceptance of an offer exactly as written. In a separate message, the accepting party asks whether the other side would consider including a refrigerator, expressly making clear that acceptance does not depend on it.
- The exercise supplies unconditional acceptance without an alteration to the offered terms.
- The separate tentative request does not itself add the refrigerator to the agreement.
Answer: Do not automatically recast the supplied acceptance as a counteroffer. Adding the refrigerator would require the appropriate agreement; a private ambiguous message may produce a different result.
4. A request after agreement
The parties already have a contract with a review clause that permits nonbinding proposals. A letter suggests changes while expressly preserving the existing agreement, and the facts establish that no termination right was exercised.
- Identify the existing agreement before applying a rule about rejection of an unaccepted offer.
- Patel illustrates why the actual clause and correspondence can make a request different from a counteroffer.
Answer: The proposal alone does not establish that the existing contract ended. This does not create a universal review period or protect every letter labeled not a counteroffer.
5. Promises and an overdue deposit
The agreement contains binding promises to convey the parcel and pay the price. It requires a deposit on Monday, but the exercise establishes that deposit delivery is not a condition to formation. The buyer misses Monday.
- The exchanged promises can supply consideration.
- The missed deposit raises the agreement's performance and remedy provisions.
Answer: Do not conclude that no contract ever formed merely because the deposit is late. Whether there is a breach, cure right or remedy requires the actual terms.
6. An essential bargain left unresolved
The parties sign a page saying they may later choose one of several unidentified parcels at a fair price to be agreed. No method, external standard or further facts resolve the property and price.
- Signatures do not make an essential unresolved bargain definite.
- Academy Chicago Publishers illustrates the distinction between supplying an appropriate missing term and inventing essential terms without an available standard.
Answer: The stated facts do not establish sufficiently definite agreement. A missing term is not always fatal; the problem here is the unresolved essential bargain without an available standard.
7. An oral sale with a quick closing
An oral land-sale bargain calls for closing in 60 days. No sufficient signed memorandum or applicable exception is established. A student says the short period eliminates the Illinois writing issue.
- A short closing schedule does not automatically exempt a land-sale agreement from Section 2 of the Frauds Act.
- The required writing, signature and any exception must still be tested.
Answer: The short schedule does not cure the supplied writing barrier. Describe the enforcement issue rather than declare every oral bargain void.
8. A disputed electronic signature
A file contains a buyer's typed name, but the buyer denies adopting it. The exercise supplies no finding about who acted, authorization or the surrounding communications.
- UETA recognizes qualifying electronic records and signatures, subject to its scope and other law.
- Attribution asks whether the act is that of the claimed person; relevant context and proof matter.
Answer: Find the evidence of who acted and with what authority. Electronic appearance alone does not prove the signature, and a denial alone does not prove that attribution is impossible.
9. A receipt-based deadline
The offer requires otherwise qualifying acceptance to be received in the designated system by 5:00 p.m. The response is signed at 4:40, sent at 4:58 and first received in that system in the required retrievable form at 5:02. No earlier acceptance, waiver or modification is established.
- The clause uses receipt, not signing or dispatch.
- The supplied receipt is two minutes after the required time.
Answer: Signing or sending before 5:00 does not meet this supplied receipt condition. This is not a universal rule for every mailed or electronic acceptance.
10. Capacity does not establish authority
A legally capable adult employee signs a proposed sale of company property. The exercise supplies no authorization and establishes no other basis for binding the company. Another scenario supplies a protected party's legally recognized right to avoid an agreement.
- The employee scenario raises authority, even though personal capacity is stipulated.
- The protected-election scenario raises voidability under its governing rule, not automatically an absence of every agreement.
Answer: Separate the authority question from the protected avoidance right. Neither a job title nor a general reference to capacity supplies the missing legal analysis.
11. A violation and its actual consequence
A student says any failure to comply with any statute automatically makes every related agreement void.
- Read the particular statute and its controlling interpretation.
- In K. Miller, a home-remodeling writing violation did not automatically bar the contract and quantum-meruit theories; the case was remanded rather than automatically awarding money.
Answer: The blanket rule is wrong. An unlawful object or an express statutory recovery bar can have a different consequence from the specific violation considered in K. Miller.
Mistakes to avoid
- Every full-price offer forces a sale A listing price alone does not establish the owner's acceptance of a particular purchase offer.
- Only major edits can be counteroffers Illinois strict-acceptance cases require care even with supposedly minor changes. Separate a changed response from a tentative inquiry.
- A signature always makes acceptance effective Check the required communication, method and timing.
- Every missing deposit proves no consideration Identify exchanged promises, any formation condition and the separate deposit obligation.
- A short land-sale period avoids the writing rule A quick closing is not an automatic Frauds Act exception.
- Every typed name proves who signed Electronic recognition and attribution are separate questions.
- Every invalidity issue has the same outcome Capacity, authority, illegality, formation and enforcement require their own governing rules.
- Executed always means fully performed Read the context: execution of a document may mean signing, while the performance comparison concerns completed duties.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. What best supports mutual assent in the ordinary contract analysis?
- A later change in market value
- The broker's hope of earning a fee
- One party's undisclosed intention
- Objective words and conduct indicating agreement to the terms
Show answer and explanation
Answer: D. Objective words and conduct indicating agreement to the terms
Assent is evaluated through the parties' outward expressions in context. A private intention, the broker's preference and a later price movement do not establish the required agreement. Disputed communications still require interpretation rather than an assumption based on a label.
2. An offer specifies September 1 closing. The response requires September 15 instead. What does that response propose?
- A counteroffer requiring acceptance of the changed bargain
- An automatic option extension
- An unchanged acceptance
- Automatic full performance
Show answer and explanation
Answer: A. A counteroffer requiring acceptance of the changed bargain
The response conditions agreement on a changed performance term. It is not acceptance of the offered bargain, completed performance or an option extension. A tentative inquiry that does not change the acceptance would present different facts; do not treat every small edit as exempt from Illinois strict-acceptance principles.
3. A timely acceptance is otherwise effective and unconditional. A separate message tentatively asks about including a refrigerator and expressly makes acceptance independent of that request. What follows from the stated facts?
- The signed acceptance is necessarily erased
- The refrigerator is automatically included
- The separate request does not itself establish a counteroffer or add the refrigerator
- Every contract term is reopened automatically
Show answer and explanation
Answer: C. The separate request does not itself establish a counteroffer or add the refrigerator
The facts supply acceptance without a changed condition. A tentative request is different from requiring a new bargain, but it does not itself obtain the requested item. Automatic inclusion, erasure and reopening all go beyond the facts. An ambiguous or conditional private message needs its own analysis.
4. Which can supply consideration in an ordinary bilateral purchase contract?
- Only the broker's advertisement
- Binding promises to convey the identified property and pay the agreed price
- Only an earnest-money check
- Only a deed that has already been recorded
Show answer and explanation
Answer: B. Binding promises to convey the identified property and pay the agreed price
The exchanged binding promises can be the bargained legal exchange. A deposit, recorded conveyance and advertisement have different functions and are not universal substitutes for analyzing consideration. Whether a particular promise is binding and the agreement has other defects must still be checked.
5. A deposit is late. The facts establish binding exchanged promises and that deposit delivery was not a condition to formation. What should be examined next?
- Automatic nonexistence of every agreement
- The deposit obligation and applicable performance, cure and remedy terms
- Automatic release of escrow to the seller
- Automatic erasure of the buyer's promises
Show answer and explanation
Answer: B. The deposit obligation and applicable performance, cure and remedy terms
Those facts distinguish consideration and formation from a potential performance problem. The contract and governing law determine the consequence of the late deposit. No automatic nonexistence, escrow release or erasure follows; an express formation condition would be a different scenario.
6. An Illinois oral land-sale bargain schedules closing in 60 days. No sufficient signed writing or applicable exception is established. Which conclusion is appropriate?
- The short schedule alone does not remove the Frauds Act writing issue
- The broker can create the missing signature without authority
- The subject matter is automatically unlawful
- Every short land sale is exempt from writing
Show answer and explanation
Answer: A. The short schedule alone does not remove the Frauds Act writing issue
A short closing schedule does not automatically exempt the land sale from Section 2. The writing defense is distinct from unlawful subject matter, and a broker's role does not create signature authority. Required signed evidence and any established exception need the actual legal test.
7. A file bears a person's typed name, but who adopted it is disputed. What does electronic recognition alone establish?
- That the named person necessarily signed
- That every missing term is supplied
- That no evidence of attribution is relevant
- That electronic form itself is not a disqualifying defect, while attribution and other requirements remain
Show answer and explanation
Answer: D. That electronic form itself is not a disqualifying defect, while attribution and other requirements remain
UETA recognition does not itself prove whose act created or adopted the signature. The other choices confuse legal recognition with attribution or with the required terms. A signature denial likewise does not alone prove that attribution cannot be established from the evidence.
8. The offer requires acceptance to be received by 5:00 p.m. The first qualifying receipt is 5:02; signing and dispatch occurred earlier. No waiver, amendment or earlier acceptance applies. Which fact controls this condition?
- The signature automatically substitutes for receipt
- Every electronic acceptance is effective on dispatch
- The qualifying receipt occurred after the stated deadline
- Reading a message is always required for receipt
Show answer and explanation
Answer: C. The qualifying receipt occurred after the stated deadline
The condition expressly uses receipt, which occurs two minutes late on the supplied facts. Earlier signing or sending does not satisfy that particular condition. There is no universal dispatch rule for every electronic acceptance, and statutory receipt is not invariably the same as a human reading the message.
9. A legally capable adult employee signs for a company, but no authority or other basis for binding it is established. Which issue needs separate attention?
- Only the signer's personal age
- Only the number of signatures on the page
- Authority to bind the company
- Only whether a deposit is cash
Show answer and explanation
Answer: C. Authority to bind the company
Personal capacity and representative authority are separate. A job title, signature count or payment form does not establish the authority missing from the facts. Actual agency, governing documents, applicable legal restrictions and any other asserted basis would require appropriate analysis.
10. The facts establish a protected party's legally recognized right to avoid an agreement under the applicable rule. Which usual exam label fits that election?
- Automatically nonexistent for every purpose
- Automatically recorded
- Voidable
- Fully performed
Show answer and explanation
Answer: C. Voidable
Voidable describes the protected election, subject to the governing rule and its requirements. Full performance and recording are different issues; the last choice ignores the distinction between void and voidable. Do not infer that every capacity or authority defect has this same consequence.
11. The parties have signed a valid purchase agreement, but conveyance and price payment remain. In the executed-versus-executory performance comparison, what describes it?
- Fully performed merely because it was signed
- Executory because obligations remain
- An oral agreement only
- Automatically void
Show answer and explanation
Answer: B. Executory because obligations remain
Executory concerns the remaining performance. Signing can be described as executing a document in another context, but that usage does not prove every contractual duty is complete. The supplied valid written agreement is neither automatically void nor oral.
12. The parties sign a proposal that leaves essential subject matter unresolved, with no usable standard for deciding the promised performance. What is the proper question?
- Whether every missing minor term defeats every agreement
- Whether a later appraisal necessarily supplies mutual assent
- Whether there is sufficiently definite agreement, despite the signatures
- Whether signatures automatically fill every essential gap
Show answer and explanation
Answer: C. Whether there is sufficiently definite agreement, despite the signatures
Academy Chicago Publishers distinguishes a usable standard for supplying an appropriate term from unresolved essential terms without such a standard. Signatures alone do not invent the bargain. Neither every omission nor a later appraisal automatically decides the question.
Common questions
What elements should I check for a real estate contract?
Check offer, effective acceptance, consideration, sufficiently definite agreement, the parties' capacity and lawful purpose. Add representative authority when someone signs for another party. Then test applicable writing, signature and other enforcement requirements. Treat this as a method for finding the issue, rather than a guarantee that a signed form settles every question.
Is a property advertisement an offer?
An advertisement or listing price usually invites offers rather than promising a sale to every reader. Read the actual language and context for a definite commitment. Steinberg explains the ordinary invitation-to-deal distinction while recognizing that some advertisements can themselves be offers. A specific real estate agreement still needs its applicable requirements.
Does changing only a small term preserve acceptance?
Do not assume that it does in Illinois. The cited Finnin decision applied strict acceptance even to changes described as minor corrections. A response that requires changed terms must be distinguished from a tentative inquiry or an unconditional acceptance with a separate request. Review the actual document and communication, not just the word minor.
Is asking for a change always a counteroffer?
No. A tentative inquiry may leave an offer under consideration. A request about an existing contract can also operate under its review or amendment terms. Patel illustrates the importance of the specific clause and correspondence. A disclaimer saying not a counteroffer is not a universal cure if the communication or governing provision has a different effect.
Do acceptance and a financing contingency conflict?
Acceptance of an offer as written can include the financing contingency already in that offer. That is different from adding or changing a financing condition in the response. Identify whether the condition was part of the offered bargain and whether the acceptance changed it. Do not assume an agreed contingency means no contract exists.
Is earnest money the same as consideration?
No. Exchanged binding promises can supply consideration in a bilateral purchase agreement. Earnest money is a deposit with its own contractual requirements. A missing deposit may raise formation, performance or remedy questions depending on the actual clause. This page does not authorize withholding a required deposit or directing an escrow release.
Do the parties need identical private thoughts to agree?
The ordinary test concerns their objective expressions in context. Steinberg explains why undisclosed intentions do not replace outward assent. That does not eliminate disputes about ambiguity, mistake, fraud or what conduct actually occurred. Those issues need their own governing rules and evidence.
Must every term appear in the agreement?
Not necessarily. An applicable standard may supply an appropriate missing term. But when essential terms are too uncertain to identify the promised performance or a breach, the court cannot simply invent the bargain. Academy Chicago Publishers illustrates that limit. No single list of blanks decides every type of agreement.
Does a land sale closing within one year avoid Illinois writing requirements?
Do not assume so. Section 2 of the Frauds Act addresses covered land agreements; a short land-sale schedule does not automatically remove the signed-writing requirement. Use sufficient written evidence signed by the party charged, or the agent authorized in writing as the statute specifies, and analyze any claimed exception separately.
Can emails and electronic signatures satisfy the writing rule?
Qualifying records and signatures can do so under current Illinois UETA. Check agreement to electronic dealings, the actual person's act or authorization, required written terms and relevant delivery conditions. A platform badge, typed name or timestamp alone does not resolve all those questions. A receipt-based offer must be analyzed under its actual condition.
Are all contracts involving a minor automatically void?
No. Fletcher illustrates the usual protected-election distinction for a minor's lease rather than a blanket void-from-the-start rule. The actual capacity, emancipation or other governing rule, circumstances and possible ratification matter. Do not apply that result mechanically to every capacity defect, guardianship or type of obligation.
Does a real estate license authorize someone to sign for the owner?
A professional license does not itself establish every power to bind a principal. Identify the particular authority and any required form. For covered land agreements, the Frauds Act expressly addresses the agent's written authorization. Company or other representative transactions can also involve separate legal restrictions and governing documents.
How are void, voidable and unenforceable different?
In the usual exam distinction, void means no binding legal effect, voidable identifies an agreement a protected party can avoid, and unenforceable identifies a barrier to the relief sought. Read the controlling statute and holding. A writing defect does not automatically mean unlawful subject matter, and not every statutory violation has the same effect.
Does executed mean signed or fully performed?
It can mean either in different contexts. Executing a document often means signing it. In the exam's executed-versus-executory comparison, executed means the relevant performance is complete and executory means duties remain. A signed purchase agreement can therefore be executory while payment and conveyance are still due.
Does an offer deadline always make it irrevocable until then?
A deadline and an enforceable promise to keep an offer open are different. An ordinary offer may be revocable before effective acceptance, subject to the applicable law. A valid option or another governing rule can change that analysis. Whitelaw distinguishes the underlying offer from the separately supported keep-open obligation. Read the terms and the actual communication; this page does not decide a private revocation timeline.
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Official sources and scope
The Illinois statutes and published opinions support the distinctions taught here. The cases involve different settings, including publishing, medical applications, a dealership stock sale, leases and remodeling. Apply the identified principle within its scope. These original scenarios do not determine a private agreement, authorize an escrow release or establish an exception to a writing or licensing rule.
- PSI June 24, 2026: Contracts formation and enforcement topics
- 740 ILCS 80/2: land agreements and required signed evidence
- 815 ILCS 333/5, 7 and 9: electronic agreement, recognition and attribution
- 815 ILCS 333/15: electronic sending and receipt
- Steinberg v. Chicago Medical School: assent, consideration and invitations to deal
- Academy Chicago Publishers v. Cheever: sufficiently definite essential terms
- Finnin v. Bob Lindsay: strict acceptance despite changes called minor
- Patel v. McGrath: tentative requests and an existing review clause
- Deutsche Bank v. Hart: void and voidable distinctions
- Fletcher v. Marshall: a minor lease and protected avoidance
- Alliance Property Management v. Forest Villa: specific authority restrictions
- K. Miller Construction v. McGinnis: read the statutory consequence
- Whitelaw v. Brady: an ordinary offer and a separately supported option
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.