A buyer submits a written offer to purchase a home in Indianapolis for $285,000. The seller responds with a written counteroffer at $295,000. Before the buyer responds, the seller calls the listing broker and says she wants to withdraw the counteroffer and accept the original $285,000 offer instead. Under Indiana law, which statement best describes the legal situation?
Correct Answer
B) The seller may withdraw the counteroffer at any time before the buyer communicates acceptance, but the original offer has already been extinguished and cannot be revived
Under Indiana contract law, a counteroffer may be revoked by the offeror (here, the seller) at any time before the offeree (the buyer) communicates acceptance. However, the act of making the counteroffer simultaneously rejected and extinguished the buyer's original $285,000 offer. That original offer no longer exists as a legal instrument and cannot be unilaterally revived by the seller. If the seller wants to proceed at $285,000, she would need to make a new offer at that price for the buyer to accept.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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