The general rule is that an offer is deemed open for the time specified in the offer or, if no time is specified, for a reasonable time in the circumstance. Given the rule, lapse disputes take two forms. If a time is specified, lapse arguments typically revolve around how the specified time is to be counted. If no time is specified, the argument will be about what is a reasonable time for the offer to be open in these circumstances.
What is reasonable in the circumstances depends on a number of factors. Market dynamics are a big factor. How long a reasonable buyer will allow an offer to last is not the same as how long a reasonable seller will allow a counter offer to last. What is reasonable depends on the specific buyer or seller in the specific market seeking the specific property at the specific time. Basically, what a court wants to know is how long do these kinds of offers in this market typically last.
If an offer expires on a certain date, the question is whether the offer expires at a minute after midnight of the day before the date or at midnight on that date. If an offer allows a certain number of days for the seller to accept, the question is when the days allowed start to run. Is it the date the offer is made or date it is received? Once that is settled, disputes can arise over whether the offer ends at midnight on the last day or at the same time of day the offer was made or received. These same counting issues arise when the expiration is expressed in hours.
Because counting issues can cause so much confusion, most real estate forms express the offer deadline as a date and time of day. This manner of expressing the offer deadline eliminates counting disputes. An offer which expires on January 1, at 5 p.m. must be accepted (signed AND communicated) no later than 5 p.m. on that date. There are no “if ands or buts.” Holidays don’t matter. There are no excuses or conditions, period. Acceptance communicated at 5:01 p.m. on January 1 would be too late.
Because offers expire automatically if not timely accepted, late acceptance communicated to the offeror acts as a counter offer. For a contract to form, the original offeror must accept the “counter offer” and communicate that acceptance to the offeree. Typically, there is no place on form contracts for the offeror to accept the offeree’s late acceptance. For that reason, it has been the practice of Oregon real estate licensees to use the “acknowledgment” clause as “acceptance.” Eventually, standard forms were changed to accommodate the use. Click here for a detailed discussion of the acknowledgment issue.
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