Sandra is selling her home in Charleston, South Carolina. She receives an offer from buyer Tom for $410,000. Sandra issues a written counteroffer at $425,000, which Tom receives on Friday afternoon. On Saturday morning, before Tom responds, Sandra sends a written notice through her agent revoking the counteroffer. Tom's agent calls back one hour later saying Tom has already signed and accepted the counteroffer at $425,000. Under South Carolina law, which outcome is most accurate?
Correct Answer
A) A binding contract exists at $425,000 because Tom accepted before Sandra's revocation was communicated to him.
Under South Carolina contract law, a counteroffer (like any offer) can be revoked by the offeror at any time before acceptance — but the revocation must be communicated to the offeree before acceptance occurs. Here, Tom signed and accepted the counteroffer before Sandra's revocation was communicated to him. The acceptance was effective when communicated (or when Tom signed and dispatched it, depending on the mailbox rule analysis). Because Tom's acceptance preceded the effective communication of Sandra's revocation, a binding contract at $425,000 was formed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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.
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