Does Irrevocable Mean Irrevocable?

Posted on: Tuesday, January 29th, 2013

I have been asked on more than one occasion by real estate agents if they can withdraw an offer after it has been submitted and prior to the irrevocable date and time.

I think the misunderstanding around this comes from the fact that in regular contract negotiations after an offer is submitted it can be withdrawn at any time prior to acceptance. A real estate agreement of purchase and sale is different. Here is why: the agreement of purchase and sale contract, once signed and submitted, is in fact a unilateral contract. In addition, the OREA standard form has clear language around the terms of an offer to purchase, which includes that once an offer is submitted it is irrevocable until the date and time set out.

The caselaw relevant to agreements of purchase and sale is the same as the caselaw related to procurement law. When a company puts out a call for tenders this is considered to be a unilateral contract. A properly submitted bid constitutes an acceptance of this offer resulting in another unilateral contract. The process is similar to buying and selling a property. The offer to sell a property is one contract and the offer to purchase is the second.

The procurement process is more complicated but the basic premises are relevant. If the contract contains a provision that the offer is irrevocable for a certain period of time, that provision is binding on the parties. When this term is used one need only to look to the definition of irrevocable for the answer. Irrevocable is defined as incapable of being recalled or revoked. It means your offer is unchangeable and unalterable.

It is important to note that the last page of the standard form agreement has the following words above the signing line “signed, sealed and delivered”. This language is used intentionally to indicate that once this agreement is signed it is considered final and binding. The word “sealed” is used to indicate that even in absence of any other consideration this is a firm contract.

This is a small item but an important part of the contract. Every real estate client should have this section explained so they are fully aware that once the agreement is signed it is binding.

This article can also be accessed in our January 2013 Newsletter by clicking here.

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