Contracts & ExecutionQuestion 791 of 1605
A homeowner emails a contractor, 'I'll pay you $8,000 to repaint my house.' The contractor emails back, 'I accept, but the price is $9,500.' Which statement best describes the legal effect of the contractor's reply?
a.It is a valid acceptance because the contractor agreed to do the work
b.It is an acceptance because price is not a material term
c.It creates a binding contract at the average of the two prices
d.It is a counteroffer that rejects the homeowner's offer, so no contract yet exists
Explanation
A purported acceptance that changes a material term of the offer is not an acceptance at all; it is a counteroffer that terminates the original offer. Because the contractor changed the price from $8,000 to $9,500, the parties have not reached mutual assent, and no contract is formed until someone accepts the new $9,500 terms. Price is a material term, so courts do not split the difference, and the original $8,000 offer is dead once rejected by the counteroffer.
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