A seller accepts a conditional offer but later receives a higher unconditional offer. The seller wants to accept the second offer. Under typical Agreement of Purchase and Sale terms, what is the seller's legal position?
Correct Answer
D) The seller is bound by the first accepted offer regardless of its conditional nature
Once a seller accepts an offer, even a conditional one, a binding contract is formed subject to the fulfillment or waiver of its conditions. The seller cannot unilaterally withdraw to accept a better offer unless the first buyer's conditions fail or the contract contains a provision, such as an escape clause, that allows it. The seller may still accept a second offer as a back-up that is conditional on the first agreement being released, but a firm, conflicting sale would be a breach.
Why This Is the Correct Answer
This answer is correct because acceptance of a conditional offer creates a binding contract. Under general contract law, once an offer is accepted, both parties are bound to perform according to its terms, subject only to the specified conditions. The seller cannot unilaterally withdraw to accept a better offer unless the buyer's conditions fail or a provision in the contract, such as an escape clause, allows it. A second offer can only be taken as a back-up, conditional on the first agreement being released.
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A seller accepts an offer with a financing condition and no escape clause. Before the condition deadline, the seller receives a higher unconditional offer. What is the seller's legal position?
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