What is a 'counter offer' and what is its legal effect on the original offer?
Why It is a rejection of the original offer and a new offer; the original offer is extinguished Is Correct
Answer B: It is a rejection of the original offer and a new offer; the original offer is extinguished
Exam Tip: Contracts
Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.
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Key Terms to Know
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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