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Q: How do escalation clauses work in conjunction with each other? 

A: It depends on how the escalation clause term is drafted. But in general, escalation clauses increase the base amount of an offer by a certain figure up to a predetermined amount, provided there is another bona fide offer.  

For example, you have two bona fide offers. Offer A is for $150,000, escalating by $1,000 up to a maximum of $175,000. Offer B is for $155,000 escalating by $2,000 up to $180,000. Let’s do the math. 

Offer A escalates to $175,000 and offer B escalates to $177,000.   

Now, must the seller accept offer B?  

No. The seller can accept either offer if they so choose. They are not bound to accept a highest and best, but are allowed to look at the terms, conditions, and other legally acceptable reasons when deciding which offer to accept. 

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