When a seller makes a counteroffer in response to a buyer's original offer, what is the legal effect?
Correct Answer
B) It rejects the original offer and creates a new offer for the buyer to consider
A counteroffer legally rejects the original offer and creates a new offer. Once a counteroffer is made, the original offer is extinguished and the original offeror (the buyer) is no longer bound by their initial offer. The buyer may then accept, reject, or counter the seller's new offer. No contract exists until there is an unqualified acceptance of an offer.
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Related Topics & Key Terms
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Related Concepts
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.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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