A buyer submits an offer on a home in Dearborn, Michigan. The offer states it is irrevocable for 48 hours. Twenty hours after submitting the offer, the buyer calls the agent and attempts to withdraw it. The seller has not yet responded. Under Michigan contract law, which statement is most accurate regarding the buyer's attempted revocation?
Correct Answer
B) The revocation is effective because the buyer has not received any consideration to keep the offer open
Under Michigan contract law, an offeror's promise to keep an offer open (an irrevocability clause) is generally not enforceable unless it is supported by separate consideration — making it an option contract. Without consideration paid to the buyer in exchange for keeping the offer open, the irrevocability clause is merely a gratuitous promise and does not bind the buyer. Therefore, despite the 48-hour irrevocability language, the buyer may revoke the offer at any time before acceptance is communicated, because no consideration was exchanged to make the promise of irrevocability binding.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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