A buyer submits an offer to purchase a Hawaii condominium and includes a provision stating the offer is irrevocable for 72 hours in exchange for a separate $500 payment made directly to the seller. The seller accepts the $500 but does not sign the purchase offer within 72 hours. The buyer then attempts to revoke the offer and demands return of the $500. Under Hawaii law, which of the following is most accurate?
Correct Answer
D) The buyer may not revoke the offer during the 72-hour period because the separate $500 consideration created an enforceable option contract
When an offeror pays separate consideration (the $500) specifically to keep an offer open for a stated period, an option contract is created. Under Hawaii law, an option contract supported by consideration is enforceable and prevents the offeror from revoking the offer during the option period. The buyer cannot revoke during the 72-hour window. The seller's failure to accept the purchase offer within 72 hours means no purchase contract was formed, but the option itself — supported by the $500 — was a separate enforceable agreement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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