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 Offer A. What is the legal status of 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 Offer A. What is the legal status of Offer B?

The correct answer is Offer B is rejected and cannot be accepted. Option B is correct because once a seller accepts an offer, they enter into a binding contract and legally cannot accept any other offers for the same property. The acceptance of Offer A automatically rejects all other pending offers, including Offer B. This follows fundamental contract law principles where acceptance creates a binding agreement. The seller's signature on Offer A constitutes both acceptance of that offer and rejection of all others. Canadian contract law, applied consistently across provinces under TRESA, RESA, and other provincial legislation, supports this principle to prevent multiple contracts on the same property.

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

Contract formation requires offer, acceptance, and consideration. In real estate, when a seller signs an accepted offer, they create a binding contract. This acceptance simultaneously rejects all other pending offers through the legal principle that one cannot sell the same property to multiple buyers. Provincial legislation like TRESA (Ontario), RESA (Alberta), and BCFSA regulations (BC) incorporate these common law contract principles. The 'mirror image rule' requires acceptance to match the offer exactly. Multiple listing scenarios are common, but only one offer can be accepted. Understanding these principles helps practitioners advise clients on timing, decision-making, and legal consequences of acceptance.

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

Think of accepting an offer like putting on a wedding ring - once you're married (accept an offer), you can't marry someone else (accept another offer) for the same commitment (property). The ring (signature) makes it official and exclusive. When you see questions about multiple offers and acceptance, remember the wedding ring - one acceptance means all other 'proposals' are automatically rejected. This helps you quickly identify that accepted offers create exclusive binding contracts.

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

Look for keywords like 'signs,' 'accepts,' or 'binding contract' in the question. Once you see acceptance language, remember that all other offers are automatically rejected. Don't overthink - acceptance equals exclusivity in real estate contracts.

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

A listing agent receives three offers on Friday for a hot property. The seller reviews all offers over the weekend and decides to accept the middle-priced offer because it has no conditions and a quick closing. The moment the seller signs that acceptance, the agent must immediately contact the other two buyers to inform them their offers have been rejected. Even if one of the rejected buyers calls an hour later wanting to increase their offer, it's too late - the property is now under contract with the accepted buyer.

Question

Contracts & AgreementsContract Law FundamentalsMEDIUM

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 Offer A. What is the legal status of Offer B?

Answer Options

A

Offer B becomes a backup offer automatically

B

Offer B is rejected and cannot be accepted

C

The seller must accept the higher offer by law

D

Both offers remain valid until conditions are satisfied