Can a seller back out of a firm offer?

This page covers Québec, where the Civil Code of Québec sets the rules for how contracts are formed. Other provinces apply their own law, which this page does not describe. The words “firm offer” are not a defined term in the Code, so start by asking what the document is: an offer, a letter of intent, or a signed agreement.

What counts as an offer

The Code defines an offer as a proposal that contains all the essential elements of the proposed contract and in which the offeror signifies a willingness to be bound if it is accepted. A document that leaves essential terms open may not meet that definition. A contract is formed when and where acceptance is received by the offeror.

Revoking before acceptance

Where a term for acceptance is attached, the Code says the offer may not be revoked before the term expires. Where none is attached, it may be revoked at any time before acceptance is received. An offer also lapses if no acceptance is received before the term expires or, with no term, before a reasonable time expires, and on events such as the death or bankruptcy of either party before acceptance is received. Éducaloi describes the same rule for offers to purchase a home.

After acceptance or a promise

Every person has a duty to honour contractual undertakings. If a seller fails to perform without justification and is in default, the buyer may force specific performance in cases which admit of it, or seek resolution of the contract, and may claim damages for injury that is an immediate and direct consequence of the default. An offer made to a determinate person is a promise to contract once the offeree clearly indicates to the offeror that it intends to consider the offer and reply within a reasonable time or the stated time. A mere promise is not the contract itself.

What to check

Read the document for a time to accept, a condition the seller needs met, and any termination right. Then ask a Québec lawyer, because the answer turns on the exact words. The page on backing out after signing a letter of intent looks at the buyer’s side.