Sarah submits a written offer to purchase a home in Minneapolis for $385,000. The seller, Tom, crosses out $385,000, writes in $395,000, initials the change, and signs the document. Tom's agent then delivers this document to Sarah's agent. Under Minnesota contract law, what has Tom done?
Correct Answer
B) Created a counteroffer, which terminates Sarah's original offer
Under Minnesota contract law, when Tom changed the purchase price and signed the document, he created a counteroffer — not an acceptance. A counteroffer is a rejection of the original offer and the simultaneous creation of a new offer on different terms. Sarah's original offer at $385,000 is terminated and she is no longer bound by it. Tom's counteroffer at $395,000 is now the operative offer that Sarah may accept, reject, or counter.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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.
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