PSI New Jersey Real Estate State Practice Exam

When a licensee receives an offer subject to an unfinished garage being completed, was a contractual obligation created?

1. Yes, the buyer is bound to the offer

2. No, the seller has not accepted the offer

3. Yes, it can be completed orally

4. No, it requires mutual agreement to create an obligation

The correct answer is: No, the seller has not accepted the offer

When an offer is presented with a specific condition, such as the completion of an unfinished garage, it introduces an element of contingency that must be satisfied for the agreement to be binding. In this case, the offer includes a condition precedent, meaning that the seller must accept the offer while acknowledging this condition for a contractual obligation to be established. If the seller has not specifically accepted the offer, including the condition related to the garage completion, then there is no binding contract in place. Acceptance is crucial to the formation of a contract; without it, the terms remain unfulfilled, and neither party is obligated to proceed. This highlights the importance of mutual agreement in the contract formation process, where both parties must agree to the terms as they stand for an obligation to be created. Consequently, if the seller does not explicitly accept the offer with the condition, the answer regarding the absence of a contractual obligation holds true, as no mutual acceptance exists to create any binding obligation.