Marcus, a buyer in Memphis, makes an offer to purchase a home for $320,000 with a 10-day acceptance deadline. On day eight, the seller counters at $330,000. Marcus then decides he wants to accept the seller's original asking price of $320,000 instead. Which of the following correctly describes the legal situation?
Correct Answer
B) The seller's counteroffer terminated Marcus's original offer, so no contract exists unless both parties agree on new terms
Under Tennessee contract law, a counteroffer operates as a rejection of the original offer and simultaneously creates a new offer. Once the seller countered at $330,000, Marcus's original $320,000 offer was legally terminated and cannot be revived. Marcus may only accept the seller's counteroffer of $330,000 or make a new offer. There is no binding contract until mutual assent is reached on the same terms.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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