The most essential part of any real estate transaction is the purchase and sale agreement (also called an earnest money agreement or residential offer). A purchase and sale agreement is a contract for the purchase and sale of a specific property. As a contract, it is governed by long-standing legal principles. The contract is created through offer and acceptance. To be a binding and enforceable contract, the contract must contain certain required terms. Once created, the contract imposes rights and obligations on both the buyer and seller. The contract may be terminated or rescinded by the parties. If one of the parties fails to live up to its obligations, the other party may have an action for breach of contract.