A seller receives two offers simultaneously: Offer A for $500,000 firm, and Offer B for $495,000 subject to financing. The seller signs and returns Offer A. What is the legal status of Offer B?

Q: What is the correct answer to: A seller receives two offers simultaneously: Offer A for $500,000 firm, and Offer B for $495,000 subject to financing. The seller signs and returns Offer A. What is the legal status of Offer B?

The correct answer is The seller must formally reject Offer B in writing. Option C is correct because offers don't automatically terminate when another offer is accepted. Under Canadian contract law and professional practice standards, the seller has a duty to formally communicate rejection to provide clear notice to the buyer. This prevents legal complications such as claims of acceptance or confusion about the offer's status. Provincial regulations emphasize clear communication in real estate transactions, making formal written rejection the proper professional practice to protect all parties and avoid potential disputes.

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

In Canadian real estate, offers are legally binding proposals that remain valid until formally rejected, withdrawn, or expired. Contract formation requires offer, acceptance, consideration, and capacity. When multiple offers exist, accepting one creates a binding contract but doesn't automatically terminate others. Provincial real estate legislation (TRESA in Ontario, RESA in Alberta, etc.) and professional practice standards require clear communication. Formal rejection protects both seller and buyer by eliminating ambiguity about offer status. This prevents situations where sellers might inadvertently accept multiple offers or buyers claim their offers were improperly handled.

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

C-ommunicate rejection clearly, L-egally protect all parties, E-liminate confusion, A-void disputes, R-eject formally in writing. Think of clearing the table after dinner - you don't just leave dishes sitting there hoping they'll disappear, you actively clear them away. When you see questions about multiple offers, remember CLEAR - the seller must actively and clearly communicate rejection rather than assuming offers automatically disappear when another is accepted.

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

Look for key words like 'automatically' in wrong answers - offers rarely terminate automatically in real estate. Professional practice requires active communication, so choose answers emphasizing formal written rejection.

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

A listing agent receives three offers on Friday evening. The seller accepts the highest offer but the agent fails to formally reject the other two. On Monday, one of the rejected buyers calls asking about their offer status and threatens legal action, claiming their offer was never properly rejected. The agent must now formally reject the remaining offers in writing and document the timeline to protect the seller from potential legal claims of multiple accepted contracts.

Question

Contracts & AgreementsOffer ManagementBCHARD

A seller receives two offers simultaneously: Offer A for $500,000 firm, and Offer B for $495,000 subject to financing. The seller signs and returns Offer A. What is the legal status of Offer B?

Answer Options

A

Offer B remains valid until its expiry time

B

Offer B is automatically rejected when Offer A is accepted

C

The seller must formally reject Offer B in writing

D

Offer B becomes a backup offer automatically