A buyer in South Bend, Indiana submits a written offer to purchase a home for $250,000 with a 5-day acceptance deadline. On day 3, the seller issues a written counteroffer at $262,000. On day 4, the buyer issues a written counteroffer back to the seller at $256,000. On day 5, the seller calls the buyer's broker and says she wants to accept the buyer's original offer of $250,000. Which of the following is the correct legal analysis?
Correct Answer
A) The seller cannot accept any prior offer because each successive counteroffer extinguished all previous offers, and only the buyer's $256,000 counteroffer currently exists
Each counteroffer in a negotiation chain legally rejects and extinguishes the prior offer. When the seller issued a counteroffer at $262,000, the buyer's original $250,000 offer was terminated. When the buyer countered at $256,000, the seller's $262,000 counteroffer was terminated. At the point of the seller's phone call, the only live offer is the buyer's most recent counteroffer of $256,000. The seller may accept, reject, or counter that offer — but cannot revive any previously extinguished offer. The original 5-day deadline is irrelevant because the offer it applied to no longer exists.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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