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Contract Negotiations

DISCUSSION:  Ted has his home listed for sale with Linda Realtor. Mary, an agent in Linda’s office, presents a contract offer from Joe Canada, who is moving to Atlanta from Toronto. Ted thinks the offer price is too low at $175,000 and asks Linda to modify the contract to a sales price of $198,000. Following Mary’s instructions, Linda express mails the contract to Joe in Toronto on Thursday afternoon. Late Friday, Mary calls and says that Joe feels the counter offer is too high but that he will prepare another offer and contact them later. On Saturday morning Linda is contacted by Sue Covington, who saw the For Sale sign in Ted’s yard. Linda shows Sue the house, and they discuss a possible deal. Over the weekend they work on the details of the sale and agree to meet at Linda’s ofice Monday morning to execute a contract with a sales price of $204,000. In the meantime, Mary had been in the office over the weekend, heard about Sue’s pending offer, and contacted Joe Canada. At 10:00 a.m. on Monday morning, as Ted, Linda, and Sue sit down to sign a final written contract, Mary interrupts and informs them that Joe Canada has accepted the counter offer Ted made on Friday with a sales price of $198,000 and lays a faxed, signed contract on the table.

QUESTION: Does Ted have a valid contract with Joe Canada for $198,000, or is he free to sign a contract with Sue Covington for $204,000?

ANSWER: Ted has a valid contract with Joe Canada and must suspend negotiations with Sue. When Mary called on Saturday and told Linda that Joe had rejected Ted’s counter offer, the statement of rejection was not put in writing. Ted’s counter offer to Joe did not have an expiration date, and Ted did not withdraw his counter offer. Although Ted had been led to believe the offer had been rejected, the offer technically remained open. The acceptance by Joe was made in writing before a contract was Sue was signed. It was a valid offer by Ted with a valid acceptance, in writing, by Joe.