A seller receives two offers on the same day: Offer A for $500,000 with no conditions, and Offer B for $520,000 with a financing condition. The seller signs and returns Offer A. What happens to Offer B?

Q: What is the correct answer to: A seller receives two offers on the same day: Offer A for $500,000 with no conditions, and Offer B for $520,000 with a financing condition. The seller signs and returns Offer A. What happens to Offer B?

The correct answer is Offer B becomes automatically void when Offer A is accepted. Option B is correct because acceptance of an offer creates a binding contract, making it legally impossible for the seller to accept any other offers on the same property. Under Canadian contract law principles applied in real estate, when Offer A was accepted, the seller's legal capacity to accept Offer B was automatically extinguished. The property is now under contract, and accepting another offer would constitute breach of contract and potentially fraudulent misrepresentation. This automatic voiding protects all parties and prevents multiple competing contracts on the same property.

Q: What background knowledge is needed for this Contracts & Agreements question?

Real estate offers are governed by contract law principles where acceptance creates binding agreements. In Canada, under provincial real estate legislation like TRESA (Ontario) and RESA (Alberta), once an offer is accepted, a binding contract exists. The seller cannot accept multiple offers on the same property as this would create competing legal obligations they cannot fulfill. This principle prevents double-selling and protects buyers' legitimate expectations. The automatic voiding of unaccepted offers upon acceptance of another offer is a fundamental protection mechanism in real estate transactions, ensuring legal certainty and preventing fraudulent practices.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

Think of a property like a single seat on an airplane - once someone sits down (accepts an offer), that seat is taken and no one else can sit there. All other 'boarding passes' (offers) for that seat become automatically invalid, even if they were for first-class (higher price). When you see questions about multiple offers, immediately think 'airplane seat' - only one person can occupy it at a time. Once acceptance happens, all other offers are automatically 'bumped' from the flight, regardless of their terms or price.

Q: What exam tip applies to this Contracts & Agreements question?

Look for the word 'accepts' in the question. Once you see acceptance of any offer, immediately eliminate options suggesting other offers remain valid or require formal rejection. Focus on the automatic legal effect of acceptance.

Q: How does this Contracts & Agreements concept apply in real world practice?

A listing agent receives multiple offers on a hot property during a bidding war. After the seller accepts one offer, the agent must immediately contact all other buyers to inform them their offers are no longer valid. This prevents confusion and potential legal disputes. The agent cannot hold other offers 'in reserve' or suggest the seller can still consider them, as doing so would misrepresent the legal situation and potentially expose all parties to liability for breach of contract or misrepresentation.

Question

Contracts & AgreementsAgreement_of_purchase_and_saleMEDIUM

A seller receives two offers on the same day: Offer A for $500,000 with no conditions, and Offer B for $520,000 with a financing condition. The seller signs and returns Offer A. What happens to Offer B?

Answer Options

A

Offer B remains valid until its expiry time

B

Offer B becomes automatically void when Offer A is accepted

C

The seller must formally reject Offer B in writing

D

Offer B takes priority due to the higher purchase price