## Facts

- A buyer, through its real estate agent, made a written cash offer to purchase the seller’s Tucson real property for $265,000 with an 8% commission.
- The seller responded with a written counteroffer for $486,000 cash, requiring acceptance by a stated deadline.
- The buyer extended its original $265,000 offer to a later deadline.
- The seller then delivered a second written counteroffer accepting the $265,000 price but reducing the commission to 4¼% and stating it would remain in effect until 5:00 p.m. on June 3.
- On June 3, the buyer decided to accept and signed the written acceptance portion of the counteroffer form at 11:58 a.m.
- Around 3:00 p.m., the seller’s agent communicated to the buyer’s agent that the seller was taking the property off the market and did not want to sell.
- The buyer later delivered the executed acceptance to the designated escrow agent and approved title at 4:15 p.m.
- The seller refused to convey, and the buyer sued for specific performance; the trial court granted summary judgment for the buyer and ordered conveyance.
- The seller appealed.

## Issues

1. Whether a counteroffer stating it will remain open until a specified time is nonetheless revocable before that time absent consideration creating an option contract.
2. Whether the seller’s revocation was effectively communicated before the buyer’s acceptance became effective, preventing contract formation.

## Decision

- The appellate court reversed the judgment ordering specific performance.
- The court held the seller effectively revoked the second counteroffer before the buyer’s acceptance became effective.
- The court directed entry of summary judgment for the seller.

## Legal Principles

- An offer or counteroffer is generally revocable at any time before acceptance becomes effective.
- A statement in an offer that it will remain open until a specified deadline, without separate consideration, does not create an enforceable option and does not bar earlier revocation.
- Revocation is effective when communicated to the offeree (including through agents), and an acceptance that becomes effective only after the offeree receives notice of revocation does not form a contract.
- Specific performance requires an enforceable contract; if no contract is formed, equitable relief is unavailable on that theory.

## Conclusion

Because the seller’s revocation was communicated before the buyer’s acceptance became effective and the “open until” language was unsupported by consideration for an option, no contract was formed and the seller was entitled to judgment as a matter of law.


Allen R. Krauss Co. v. Fox, 132 Ariz. 125, 644 P.2d 279 (Ct. App. 1982)