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Happened to me too. Got an interview, then an offer, and a couple of days later a friend of theirs got the job instead. So much for moral obligations...
Thankfully I had waited on responses from other companies before telling them to ignore my other applications, so I had no trouble taking another offer.
GOTOs are a bit like wire coat hangers: they tend to breed in the darkness, such that where there once were few, eventually there are many, and the program's architecture collapses beneath them. (Fran Poretto)
And... you fell for their trap. What they did is unprofessional and should be seriously considered in future job searches. My experience says that short times for consideration are red flags being waved in your face.
Did it involve a suggestion that you might be sleeping with the fishes?
I did not know we had Troy McClure as a member.
"I controlled my laughter and simple said "No,I am very busy,so I can't write any code for you". The moment they heard this all the smiling face turned into a sad looking face and one of them farted. So I had to leave the place as soon as possible." - Mr.Prakash One Fine Saturday. 24/04/2004
I have made the decision to decline your job offer and will no longer be joining you at this time. I have recently been offered an alternative role with another organisation which is much more suited to my current situation.
I apologise for any inconvenience this may have caused you and I thank you for your time and interest.
Basically just keep it short and to the point. It is good to mention the other offer as it reduces their need to come back with follow up questions (which they likely will if you don't say anything), which you don't want.
If they are professional enough then you will get a short "we are sorry but all the best" reply. Otherwise you might get a short and ungrateful one... either way, you shouldn't need to take any further action with them.
This happens a lot. It's the nature of job-hunting. If you've had two interviews, and one makes you an offer, and you're under pressure to say yes or no then you should say yes. You can't assume the other will be an offer, so if you don't accept the first you might end up with nothing. In practice it's the agency (if any) that gets upset (and might call you unprofessional) rather than the client, for understandable reasons. But that's life.
As I was once told, if you don't look after yourself, no-one else will. Harsh, but true.
I have made the decision to decline your job offer and will no longer be joining you at this time
Too brutal, too much information, and with bits in the wrong order.
Unfortunately, circumstances dictate that things will not be able to go forward as planned, and I am no longer able to join you at this time.
I thank you for your time and interest in me, and apologise for any inconvenience this may cause.
You've got to use things like "join you at this time" and "your interest in me", in case the other job goes pear-shaped.
I wanna be a eunuchs developer! Pass me a bread knife!
Agree - make it non-personal. Blame "circumstances" not personal choice.
Do this sooner rather than later if you are feeling guilty about letting down company A; BUT do wait until you've had and accepted a formal offer from B, otherwise it becomes very awkward to go back to A and say, "you know that job offer I turned down? Due to a change in circumstances..."
Agreed, there must be some reasonable timeframe for an applicant to accept or decline an offer.
"the debugger doesn't tell me anything because this code compiles just fine" - random QA comment
"Facebook is where you tell lies to your friends. Twitter is where you tell the truth to strangers." - chriselst
"I don't drink any more... then again, I don't drink any less." - Mike Mullikins uncle
Use the example letter musefan posted and take the job with Company B. Since Company A switched jobs and compensation on you, it sounds like they didn't really want you anyway, but thought you might be desperate enough to take whatever they offered. Even their counter offer sounds like they are not terribly interested in having you work for them. I can't imagine that would have been a good working relationship anyway.
I don't think they thought I was desperate. They knew I was talking with other companies, and had at least one offer. I think at least a good part of it was corporate limitations since it's such a large company. I mean I think they tried their best offer because they knew I wasn't desperate.