California Real Estate Broker ExaminationContractsMedium
A buyer makes a written offer to purchase a home. The seller reviews the offer and changes the closing date from 45 days to 60 days, initialing the change, and then signs the document. What has occurred?
- ACounteroffer
- BRejection
- CRevocation
- DAcceptance
Show answer & explanationAnswer & explanation
Correct answer: A. Counteroffer
Any change to an offer, no matter how minor, constitutes a counteroffer. A counteroffer automatically terminates the original offer and creates a new offer.
Why the other options are wrong
- B. While a counteroffer effectively rejects the original offer, 'counteroffer' is the more precise term for the action taken by the seller.
- C. Revocation is when the offeror withdraws their offer before acceptance, which is not what happened here.
- D. Acceptance must be absolute and unconditional; changing a term prevents it from being an acceptance.
Counteroffer
A new offer made in response to an original offer, which rejects the original offer and proposes new or modified terms.
- Terminates the original offer
- Creates a new offer
- Must be accepted by the original offeror
Memory trick: Counteroffer: 'I'll take it, but with THIS change!'