Verbal Yes, Higher Offer on Monday
A negotiator lists a 3-bedroom apartment at RM780,000 for a seller who is emigrating and wants a fast, clean sale. On Saturday a buyer signs the firm's offer form offering RM750,000, with RM7,500 earnest deposit paid to the firm as 'stakeholder', on terms 'subject to SPA within 21 days'. On Saturday evening the seller tells the negotiator by phone: 'OK, proceed.' She never signs anything. On Monday a second buyer offers RM800,000 - and she is the negotiator's sister-in-law. The seller now says she prefers the higher offer. The first buyer has already paid a mover's deposit and booked the lift.
1. Is the seller contractually bound to the first buyer, and did the negotiator have authority to take the deposit?
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Work through the layers rather than jumping to 'a deal is a deal'.
Is there acceptance? An offer is accepted when acceptance is communicated, but here several things are unresolved: the offer form is expressly conditional ('subject to SPA within 21 days'), the seller's acceptance was oral, and the identity of the contracting parties and the terms of forfeiture are not settled. The default position in Malaysian practice is that the deposit-plus-offer-form stage is a pre-contract arrangement, with the binding contract arising on execution of the SPA. Add the land law overlay: contracts for dealings in land are required to be in writing and signed, so a purely oral 'proceed' is a weak foundation for saying a concluded contract exists. The safest professional assessment is that the seller is almost certainly not bound to complete, but is at real risk of a claim if the offer form contained an unqualified acceptance mechanism or a forfeiture clause.
The deposit. Authority is everything. A negotiator may only receive money on the principal's behalf if the agency agreement or the offer form authorises it, and even then only as agent or stakeholder as stated. If the firm received it as stakeholder, it holds it for whoever becomes entitled under the terms - it cannot hand it to one side on instruction.
Action: do not tell either party that a contract exists or does not exist. Get the seller to accept or reject in writing, immediately, and read the offer form's deposit clause before saying a word about forfeiture.
2. May the negotiator present the RM800,000 offer, and what must happen with the first buyer?
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Yes - present it, in writing, and at once. Until a binding contract is in place the negotiator's duty is to the principal: every offer is put to the seller, with no filtering and no delay. Withholding the offer to protect the first buyer would be a breach of duty to the seller and, if it later emerges, an indefensible one. If an arguable contract does exist, the seller accepting the higher offer is her commercial and legal risk, not a reason to suppress the information - but the negotiator must spell that risk out to her in writing before she decides.
The first buyer is not owed confidentiality on the fact that a higher offer exists, but is owed honesty about the position. He should be told promptly that his offer has not been accepted, that the seller is considering another offer, and where his RM7,500 sits. Silence while he spends money on movers is how complaints and claims are manufactured.
Format matters. Record the second offer on the firm's standard form with the buyer's signature, date and time it was received into the office, and record the time the seller was informed. If a dispute arises about who offered what and when, the file is the only evidence that will matter.
Do not invite the first buyer to 'top up' in a private auction you have not disclosed to both sides, and do not accept the second offer on the seller's behalf unless authorised.
3. The higher offer comes from the negotiator's sister-in-law. What changes?
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Everything about how the file must be handled, even though the transaction itself is not prohibited.
A personal interest must be disclosed in writing, before the seller decides. The seller is entitled to know that the competing buyer is the negotiator's sister-in-law before she weighs the two offers. Disclosure after the fact is worth very little; disclosure after a dispute is worth nothing.
Then obtain informed consent, or step aside. The clean route: the seller gives written consent to the negotiator continuing on the file, having been told the relationship and told that she may require another negotiator. The safer route - and the one I would push: hand the whole file (or at least all dealing with the second offer) to a colleague within the firm, and have no part in advising the seller on the choice between the two offers. The negotiator can still be the one who introduced the buyer, but not the one who advises the seller whether to accept.
Why this matters practically: if the seller later discovers the relationship and the sale was at RM800,000 against a RM830,000 offer that never reached her, or if the first buyer sues, the undisclosed relationship becomes the story. The negotiator's evidence on every other point becomes suspect.
Boundaries to state clearly: no commission or benefit from the sister-in-law, no acting for both sides in the same transaction, and no discussion of the seller's bottom line with the buyer's side. Failure here engages the Board's conduct standards on conflicts of interest and the agency duty of good faith, not merely bad manners.