In a very simple jQuery modal, I close the modal by clicking on CLOSE as
$('#close').click(function(e) {
  e.preventDefault();
  $('#overlay, #alertModalOuter').fadeOut(400, function() {
     $(this).remove();
  });
});
How can I close the modal by clicking whether on CLOSE button (which is inside the modal windows) OR clicking anywhere outside the modal window.
Changing your function like so should work:
    $('#close, #overlay').click(function(e) {
      e.preventDefault();
      $('#overlay, #alertModalOuter').fadeOut(400, function() {
      $('#close').remove();
    });
});
I found it helpful to include:
$('.item-modal').click(function(e) {
  e.stopPropagation();
});
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