Florida Real Estate Sales Associate Examination Content OutlineReal Estate Contracts and AgencyMedium
A buyer makes an offer on a property. The seller counters the offer with slightly different terms. In contract law, what is the legal effect of the seller's counteroffer on the buyer's original offer?
- AIt terminates the original offer.
- BIt extends the validity of the original offer.
- CIt creates a new offer, but the original remains open.
- DIt automatically accepts the original offer.
Show answer & explanationAnswer & explanation
Correct answer: A. It terminates the original offer.
A counteroffer acts as a rejection of the original offer and simultaneously creates a new offer. The original offer is no longer valid or available for acceptance.
Why the other options are wrong
- B. A counteroffer does not extend the original offer; it replaces it.
- C. It creates a new offer, but critically, the original offer is terminated, not still open.
- D. A counteroffer is a rejection, not an acceptance.
Counteroffer
A new offer made in response to an initial offer, which has the effect of rejecting the original offer.
- Rejects the original offer
- Creates a new offer
- Changes one or more terms of the original offer
Memory trick: Offer is a proposal, Acceptance is agreement, Counter is a cancel and create.