Maryland Home Improvement PSI Practice Exam

When prospective buyers accept a counteroffer, what is the status of their contract with the seller?

1. The contract on the first house is not enforceable.

2. Neither contract is enforceable.

3. Only the first contract is valid.

4. Both contracts are valid.

The correct answer is: Both contracts are valid.

When prospective buyers accept a counteroffer, the status of their contract with the seller reflects the principles of contract law, particularly regarding offers and acceptance. When a counteroffer is made, it actually serves to reject the original offer, which means the original contract becomes void. In many real estate transactions, if the buyers accept the counteroffer, they are essentially agreeing to the new terms proposed by the seller. This acceptance creates a new contract that is valid and enforceable. Therefore, the original offer that preceded the counteroffer is no longer in play, and only the newly accepted counteroffer serves as the basis for the contract between the buyers and the seller. This understanding helps clarify that multiple contracts or agreements cannot coexist regarding the same transaction once one party accepts the other's offer. Thus, only the most recent acceptance—which is the counteroffer—becomes the enforceable contract. The other options fail to reflect this fundamental aspect of contract law, making it clear why the correct understanding is that the contract formed by the acceptance of the counteroffer is the new and sole enforceable agreement.