Offer, Counter, and Examples
Time for a bit of contracts! HH Legal has recently run into a few questions regarding offers, counters, and delivery there of. So, lets review the basics and apply those to some examples:
THE BASICS
Offers occur whenever all of the material terms of the contract are conveyed to the other side. For our purposes in real estate, this means an OREC residential sale contract is filled out and emailed to the opposing agent. The important factors here are: (1) material terms and (2) delivered.
Counter-offers act as both a rejection of the original offer and an offer in and of itself. A counter-offer is only effective when delivered to the other side. If a counter-offer is transmitted, the original offer cannot be accepted.
EXAMPLES:
These examples are based on the questions HH Legal has received. The question is whether or not a contract is formed!
(Q1) Buyer sends Seller an offer at 9:12 p.m. Seller’s Agent sends a counter-offer to Buyer’s Agent at 9:32 p.m. Buyer then signs the counter offer at 9:48 p.m. Seller’s Agent sends a revocation of the counter-offer at 9:52 p.m. Buyer’s Agent sends the signed counter-offer to Seller’s agent at 9:53 p.m.
(A1) Unfortunately for Buyer, no contract is formed here. The signed Counter-Offer needed to be delivered to Seller BEFORE the revocation occurred. So, the best practice is to send those executed documents ASAP.
(Q2) Buyer sends Seller an offer with all the material terms. Seller sends a counter-offer stating that the counter will terminate Wednesday at 11:59 p.m. Seller does not hear anything from Buyer. On Wednesday morning, Seller sends Buyer an executed copy of the original offer.
(A2) Nope! No contract here. The moment Seller sent a counter-offer, they rejected the original offer. That original offer is not longer on the table.
(Q3) Buyer sends Seller an offer stating that such offer must be accepted before 11:59 p.m. on Friday. Seller signs the offer at 11:58 p.m., but Seller’s Agent does not send said offer until Saturday morning.
(A3) Unfortunately, a contract is not formed here either as delivery is key. The offer must be accepted and delivered prior to the time limit. Fortunately for this example, the parties actually executed another contract.