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A Florida court has considered whether a prospective buyer could choose to accept a seller’s counter offer to the prospective buyer, even after the prospective buyer had countered the seller’s counter offer.
Theresa Polk (“Seller”) listed 181 acres of land for sale with a real estate broker. BHRGU Avon Properties, LLC (“Prospective Buyer”) made an offer to purchase the property on January 24, 2005. The Seller made two counteroffers (“Counteroffers”) on February 2 & 3, 2005, giving the Prospective Buyer until 5PM on February 7, 2005 to accept the offers.
On February 4th, the Prospective Buyer made offers altering the terms of the Counteroffers. The Seller never responded to these counter-counteroffers. Prior to the February 7th deadline, the Prospective Buyer signed the Counteroffers and returned them to the Seller along with a $25,000 deposit. The Seller accepted the check but never cashed it and eventually wrote “VOID” across the front.
When the Seller refused to perform the alleged purchase contract, the Prospective Buyer filed a lawsuit seeking specific performance of the contract. The trial court ruled in favor of the Prospective Buyer, finding that the Counteroffers constituted option contracts and the Prospective Buyer’s counter-counteroffer did not terminate the Prospective Buyer’s ability to accept the counteroffers. The trial court ordered the parties to determine which of the Counteroffers constituted the purchase agreement. The Seller appealed.
The District Court of Appeal of Florida, Second District, reversed the trial court and ruled in favor of the Seller. The court first considered whether the Counteroffers constituted enforceable option contracts. An option contract must have two elements: first, an underlying contract which is not binding until accepted; and second, an agreement to hold the agreement open until the other party has an opportunity to accept. The option must also be supported by consideration. If the “option” is not supported by consideration, then it is merely an offer and not a contract.
Since the Counteroffers were not supported by consideration, the court ruled that the Counteroffers were not option contracts. The trial court had found that the Prospective Buyer’s $25,000 deposit check constituted consideration, but the appellate court rejected this ruling. The $25,000 deposit was consideration for the purchase contract, not consideration in support of an option to purchase. Option contracts are separate contracts, and so require their own consideration. Thus, the Counteroffers were simply offers because they were not supported by consideration and not binding option contracts.
The court also stated that a counteroffer constitutes a rejection of the original offer. Because the Prospective Buyer had made a counteroffer to the Counteroffers, it had rejected the Counteroffers and terminated its ability to accept the Counteroffers. The Seller had no obligation to accept the Prospective Buyer’s attempt to accept the Counteroffers after it had rejected them. Because the Seller did not manifest any intent to accept the Buyer’s counter-counteroffers, the trial court should not have ordered specific performance in favor of the Prospective Buyer. Thus, the court reversed the trial court and ordered that the trial court to enter a ruling in favor of the Seller.
Polk v. BHRGU Avon Properties, LLC, 946 So.2d 1120, Fla.App. 2 Dist.,2006. [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].