Difficulty: Easy

Average Score: 86%

A seller counters a buyer’s offer. Is there a contract?

Rationale

No, the seller has not accepted the offer.

In contract law, a counteroffer constitutes a rejection of the original offer and presents new terms. Until the seller accepts the counteroffer, there is no binding contract between the buyer and seller.

A (Yes both offered to enter a contract) YOUR ANSWER

This choice is incorrect because the act of countering an offer signifies that the seller has not accepted the buyer's original terms. A valid contract requires mutual consent, which is not established when one party makes a counteroffer.

B (Yes a definite offer was made by the buyer) YOUR ANSWER

While the buyer did make a definite offer, the seller’s counteroffer indicates that the buyer's original offer has been rejected. Therefore, no contract is formed until the seller explicitly accepts the terms proposed by the buyer.

D (No obligations must be in writing and notarized) YOUR ANSWER

This choice misinterprets the requirements for a valid contract. While certain types of contracts must be in writing under the Statute of Frauds, not all contracts require notarization. Furthermore, the lack of acceptance in this scenario is the primary reason no contract exists, regardless of the formality of writing or notarization.

Conclusion

In the context of contract formation, a counteroffer by the seller indicates a rejection of the buyer's original offer, thereby preventing the establishment of a binding agreement. For a contract to exist, acceptance of the original offer must occur; thus, until the seller accepts the terms, no legal obligations arise between the parties.

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