A buyer's agent discovers that their client's offer was accepted, but later learns that a higher offer was submitted after theirs but before the seller's acceptance was communicated. What is the legal status of their client's agreement?

Q: What is the correct answer to: A buyer's agent discovers that their client's offer was accepted, but later learns that a higher offer was submitted after theirs but before the seller's acceptance was communicated. What is the legal status of their client's agreement?

The correct answer is The agreement is valid because acceptance occurred before knowledge of the higher offer. Option B correctly applies the fundamental contract law principle that a binding agreement forms upon proper acceptance and communication, regardless of subsequently received offers. Under Canadian contract law and provincial real estate regulations, the validity of a contract depends on the moment of acceptance, not on later discoveries of competing offers. Once the seller accepts and communicates that acceptance, a legally binding contract exists that cannot be invalidated by the mere existence of higher offers received after acceptance occurred.

Q: What background knowledge is needed for this Residential Trading question?

Contract formation requires offer, acceptance, consideration, and communication of acceptance. In real estate, once a seller accepts a buyer's offer and properly communicates that acceptance, a binding contract exists. The timing of acceptance is crucial - it must occur before the offer expires or is revoked. Provincial legislation like TRESA (Ontario), RESA (Alberta), and BCFSA regulations govern real estate transactions but don't override fundamental contract law principles. Multiple offers are common, but only the first properly accepted offer creates a binding contract. Subsequent offers become irrelevant once acceptance occurs.

Q: What is a good way to remember the answer to this Residential Trading question?

Remember FIRST: 'First In, Right Sealed, Time matters.' The first offer that gets properly accepted and communicated wins, regardless of what comes after. Think of it like a race - once you cross the finish line (acceptance + communication), the race is over, even if faster runners are still coming. When you see questions about competing offers or timing issues, immediately think 'FIRST' and focus on which offer was accepted first and properly communicated, not which offer was highest or received later.

Q: What exam tip applies to this Residential Trading question?

Focus on the timing of acceptance and communication, not the value of offers or when other offers were received. Once acceptance occurs and is communicated, the contract is binding regardless of subsequent events.

Q: How does this Residential Trading concept apply in real world practice?

A seller receives an offer for $500,000 at 2 PM and accepts it, with the buyer's agent notified at 2:30 PM. At 3 PM, a second offer for $520,000 arrives, but the seller cannot accept it because they're already bound by the first contract. The buyer's agent should reassure their client that their agreement is valid and binding, despite the higher competing offer that came later.

Question

Residential TradingOffer ProcessHARD

A buyer's agent discovers that their client's offer was accepted, but later learns that a higher offer was submitted after theirs but before the seller's acceptance was communicated. What is the legal status of their client's agreement?

Answer Options

A

The agreement is void because a higher offer was received

B

The agreement is valid because acceptance occurred before knowledge of the higher offer

C

The agreement is voidable at the buyer's option within 24 hours

D

The seller must accept the higher offer due to fiduciary duty