A seller receives three offers on the same day. The first offer expires at 6 PM, the second at 8 PM, and the third at 10 PM. The seller signs and returns the second offer at 7 PM. What is the legal status of the three offers?
Correct Answer
A) Only the second offer is valid; the first expired and the third is automatically revoked
When the seller accepted the second offer at 7 PM, a binding contract was formed with that buyer. The first offer had already expired at 6 PM, and the acceptance of the second offer automatically revokes the seller's ability to accept the third offer, as the seller can only sell the property once. The third offer becomes legally impossible to fulfill.
Why This Is the Correct Answer
Option A correctly identifies that only the second offer remains valid. The first offer expired at 6 PM before any acceptance occurred. When the seller accepted the second offer at 7 PM, a binding contract was formed. This acceptance automatically revoked the seller's legal ability to accept the third offer, as selling the same property twice is legally impossible under Canadian contract law. The third offer becomes void due to legal impossibility, not requiring formal rejection.
Why the Other Options Are Wrong
Option B: All three offers remain valid until their respective expiry times
This is incorrect because offers don't remain valid indefinitely once circumstances change. While the third offer was technically valid until 10 PM initially, the acceptance of the second offer at 7 PM created a legal impossibility for the seller to fulfill the third offer. The seller no longer owns the legal right to sell the property to the third buyer, making that offer automatically void.
Option C: The seller must notify the first and third buyers that their offers are rejected
While good practice, formal notification is not legally required. The first offer expired naturally at 6 PM. The third offer became automatically revoked when the seller accepted the second offer due to legal impossibility - the seller cannot sell the same property twice. The legal status changes automatically without requiring formal rejection notices, though professional courtesy suggests notification.
Option D: The seller can still accept any of the three offers until 10 PM
This is incorrect because the seller lost the legal ability to accept other offers once they accepted the second offer at 7 PM. A binding contract was formed with the second buyer, and the seller cannot legally sell the same property to multiple parties. The acceptance created legal impossibility for fulfilling any other offers, regardless of their expiry times.
Deep Analysis of This Contracts & Agreements Question
This question tests understanding of contract formation and the legal impossibility doctrine in real estate transactions. When multiple offers exist simultaneously, each represents a separate potential contract until accepted or expired. The critical principle is that once a seller accepts one offer, they cannot legally accept another for the same property - this would constitute selling the same asset twice, which is legally impossible. The timing sequence is crucial: the first offer expired naturally at 6 PM, the second was accepted at 7 PM creating a binding contract, and the third became automatically revoked upon acceptance of the second. This scenario frequently occurs in competitive markets and demonstrates why understanding offer timing and acceptance is essential for real estate professionals.
Background Knowledge for Contracts & Agreements
Contract formation requires offer, acceptance, consideration, and legal capacity. In real estate, offers have specific expiry times and can be revoked before acceptance. Once an offer is accepted, a binding contract forms immediately. The doctrine of legal impossibility prevents a party from entering conflicting contracts for the same subject matter. Under Canadian provincial real estate legislation (TRESA in Ontario, RESA in Alberta, etc.), real estate contracts must be in writing and properly executed. Multiple offers are common in competitive markets, but only one can be accepted per property.
Memory Technique
The Musical Chairs RuleThink of offers like musical chairs - when the music stops (seller accepts), only one person gets the chair (property). All other players (offers) are automatically out of the game, regardless of how long they planned to keep playing (expiry times). Once someone sits down (acceptance), the game is over for everyone else.
When you see multiple offer questions, visualize musical chairs. Ask yourself: 'Has someone already sat down (been accepted)?' If yes, all other offers are automatically out, regardless of their expiry times or whether they've been formally notified.
Exam Tip for Contracts & Agreements
Focus on the acceptance time versus expiry times. Once any offer is accepted, all others become legally impossible to fulfill. Don't get distracted by notification requirements - the legal status changes automatically upon acceptance.
Real World Application in Contracts & Agreements
A listing agent receives three offers on a hot property Friday afternoon. The first expires at 5 PM, second at 7 PM, third at 9 PM. At 6 PM, the seller accepts the second offer and signs back. The agent must immediately inform the third buyer that their offer can no longer be accepted, even though it hasn't expired, because the property is now sold. The first offer simply expired naturally.
Common Mistakes to Avoid on Contracts & Agreements Questions
- •Thinking all offers remain valid until their expiry times regardless of other acceptances
- •Believing formal rejection is required for offers to become invalid
- •Assuming the seller can accept multiple offers and choose later
Key Terms
More Contracts & Agreements Questions
What is the primary purpose of an Agreement of Purchase and Sale (APS) in a real estate transaction?
In a listing agreement, what does the term 'holdover period' refer to?
Which of the following is NOT typically considered an essential element for a valid contract under Canadian common law?
When can a conditional offer become unconditional in a real estate transaction?
A buyer submits an offer with a financing condition that expires at 11:59 PM on Friday. The buyer's mortgage application is approved at 10:30 AM on Saturday. What is the legal status of the offer?
- → In Ontario, what is the significance of the 'irrevocable' period in an Agreement of Purchase and Sale?
- → A seller receives two offers on the same property. The first offer is conditional on financing, and the second is unconditional but for a lower price. What is the seller's best legal option?
- → What happens when a buyer waives a home inspection condition after discovering significant structural issues during the inspection?
- → In British Columbia, if a listing agent presents an offer to their seller client that contains an unusual clause they don't understand, what is their professional obligation?
- → A buyer's agent discovers that their client has been declared bankrupt but has not disclosed this information. The client wants to submit an offer on a property. What should the agent do?
- → What is the primary purpose of an Agreement of Purchase and Sale in a real estate transaction?
- → In a listing agreement, what does the term 'holdover period' refer to?
- → Which of the following is NOT typically considered an essential element for a valid contract under Canadian common law?
- → What happens when a condition in an Agreement of Purchase and Sale is not fulfilled by the specified deadline?
- → A buyer submits an offer with a financing condition that must be satisfied within 5 business days. On day 4, the buyer's mortgage application is approved but they want better terms. What can the buyer legally do?
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A seller receives two competing offers on the same day. The first offer has no conditions, and the second offer is conditional on financing and home inspection. How should the seller's agent advise them to proceed?