Sarah submits a written offer to purchase a home in Billings, Montana for $385,000. The seller, Tom, crosses out the purchase price and writes in $395,000, then signs and returns the document to Sarah. Under Montana law, what has Tom created?
Correct Answer
A) A counteroffer that terminates Sarah's original offer
Under Montana contract law, when a seller materially changes the terms of a buyer's offer and returns it, this constitutes a counteroffer, which simultaneously rejects and terminates the original offer. Tom's modification of the purchase price is a material change, creating a new offer from Tom to Sarah that she is free to accept or reject.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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