34. A seller sent a buyer a letter in which she offered to sell property for $85,000 cash by a special warranty deed. The buyer sent a letter back to the seller stating, 'I accept your offer at $85,000 cash, but you must convey with a general warranty deed.' Which of the following is true about the buyer's letter?
Answer: C
The buyer's letter is a rejection of the seller's offer, but it also constitutes a counteroffer.
The buyer's response modifies the terms of the original offer by insisting on a general warranty deed instead of the special warranty deed proposed by the seller. This alteration means that the buyer is not simply accepting the seller's terms, but instead making a new offer based on different conditions.
A) It is an acceptance, because the buyer is entitled to a general warranty deed.
This option incorrectly states that the buyer's letter is an acceptance. While the buyer expresses willingness to proceed with the purchase, the condition of requiring a general warranty deed constitutes a change to the original offer, thus making it a counteroffer rather than an acceptance.
B) It is merely an inquiry of the seller, and has no legal effect on the seller's original offer.
This option is incorrect because the buyer's letter does not simply inquire about the terms; it explicitly modifies the terms of the original offer. An inquiry would not change the terms, but this letter clearly states a condition for acceptance.
C) It is a rejection of the seller's offer, but it also a counteroffer.
This statement accurately describes the situation. The buyer's insistence on a general warranty deed means that the original offer is rejected, and the new terms proposed create a counteroffer, which the seller must now consider.
D) It is an implied contract, because the buyer was willing to pay cash, and because the buyer accepted in writing.
This option is incorrect as well, as the buyer's letter does not create an implied contract. Instead, it modifies the original offer, leading to a counteroffer rather than establishing a binding agreement under the proposed conditions.
Conclusion
The buyer's letter effectively rejects the seller's original offer while simultaneously proposing new terms, thus establishing a counteroffer. All other options either misinterpret the nature of the buyer's response or fail to recognize the legal implications of the modified terms. Understanding the difference between acceptance and counteroffer is crucial in contract law, as it determines the next steps in negotiations.