When a counter offer is made, that only changes 1 term of the original offer, do the other terms apply?

Question

Say Susan offers to sell her house to Bob for $150,000, to be paid in 180 days with a $20,000 immediate down payment.

Bob receives the offer and rejects it by sending Susan a counter offer of "How about $140,000 instead?" No other terms are mentioned in the counter offer.

Susan accepts Bob's counter offer, and they now have a contract. Do the 180 day term and $20,000 immediate down payment still stand?

Answer 1

     As a general rule a counter offer rejects and thus negates all terms of the original offer.  What you have now is an agreement to buy for 140,000.  Question is, would an oral agreement in this case be binding?  The Statute of Frauds requires that all agreements to sell real property be written, so in this case the agreement could be invalid.

Also, for a contract to be found, the terms must be specific enough for a remedy to be fashioned in event of a breach.  Here, the only term provided in the accepted counter offer is price.  Under the provisions of the UCC, however, the missing terms can be supplied by "gap fillers."

Most likely common custom and usage would be used to supply term of the deal and what down would be required.

Answer 2

The terms should be the same.  The way you explain it is that the negotiations are being exercised verbally.  The final and binding contract should be in writing where both parties will sign final contract.  If there are any misunderstandings they will obviously be noticed and addressed on the final contract.

If you are exercising these negotiations with a written offer going back and forth, you should have all the changes that were made initialed by both parties.  If it gets too messy in that process, I usually just write up a new contract, so that it's clean and legible.  That will help you in the future when your lender needs a copy of the contract and such.  It will make your life easier...believe me!

Good Luck!  

Answer 3

Yes.  Because Bob's offer is a counter offer, the remaining terms apply.

Answer 4

Yes, generally if the only thing that changed is the purchase price, then the parties have implicitly agreed to incorporate the other terms and conditions by reference.  Although, technically, any counter-offer could reject the entire previous offer, the fact that Bob's counter-offer included only one new term implies he "accepted" all the other terms offered.  Bob had the opportunity to say, "$140,000 and you buy the title insurance", but he didn't, so that isn't part of his offer. At any point in this transaction that Bob or Susan wanted to add terms (or kill the whole deal), they had their chance when the counter-offer arrived.

Susan could have said, "$140,000 but pay in 90 days," so she is, in a sense, estopped from claiming she meant something different from what was already discussed.