A seller in Flint accepts a purchase offer but later receives a higher offer from a different buyer. The seller wants to accept the second offer and cancel the first contract. The first buyer has already signed the purchase agreement and the seller communicated acceptance. Under Michigan law, which of the following statements is correct?
Correct Answer
D) The seller is bound by the first contract and cannot unilaterally cancel it simply to accept a higher offer
Once a purchase agreement is fully executed — meaning both parties have signed and acceptance has been communicated — it is a binding contract under Michigan law. The seller cannot unilaterally cancel the agreement simply because a better offer has arrived. Doing so would constitute breach of contract, potentially exposing the seller to damages or specific performance claims.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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.
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