A buyer in Indianapolis submits a written offer to purchase a home for $340,000. The seller issues a written counteroffer at $355,000 with a 48-hour acceptance deadline. The buyer signs the counteroffer accepting the $355,000 price but adds a handwritten note in the margin stating 'Seller to leave the dining room chandelier.' The buyer's broker delivers the signed counteroffer with the handwritten note to the seller's broker at hour 47. The seller's broker verbally tells the buyer's broker 'We'll consider it accepted — the chandelier note is fine.' No additional written document is signed. Is there a binding contract, and if so, at what price and with what terms?
Correct Answer
D) No binding contract exists, because the buyer's handwritten addition constitutes a counteroffer that rejected the seller's $355,000 counteroffer, and the seller's verbal agreement does not satisfy Indiana's Statute of Frauds
This scenario involves two independent legal problems. First, the buyer's handwritten addition of the chandelier term is a modification to the seller's counteroffer. Under the mirror image rule of Indiana contract law, an acceptance that adds any new term — no matter how minor — constitutes a counteroffer, not an acceptance. The buyer's signed document with the handwritten note therefore rejected the seller's $355,000 counteroffer and created a new counteroffer at $355,000 plus the chandelier. Second, even if the seller's verbal response could be construed as acceptance, it does not satisfy Indiana's Statute of Frauds (IC 32-21-1-1), which requires real estate contracts to be in writing and signed by the party to be charged. No enforceable contract exists until the seller provides a written signed acceptance of the buyer's most recent counteroffer.
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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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