CIM Ins. Corp. v. Cascade Auto Glass, Inc.
2008 N.C. App. LEXIS 1066, 660 S.E.2d 907, 190 N.C. App. 808 (2008)
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Rule of Law:
When an offer expressly states that acceptance may be made by performance of an act, the performance of that act constitutes acceptance of the offer's terms, forming a binding unilateral contract even if the performing party simultaneously voices objections to those terms.
Facts:
- Cascade Auto Glass, Inc. ('Cascade') is an automobile glass replacement company doing business in North Carolina.
- CIM Insurance Corporation and other GMAC-affiliated companies ('GMAC') provide automobile insurance that covers windshield repair and replacement.
- Prior to 1999, GMAC generally paid the full amounts Cascade billed for work on GMAC-insured vehicles.
- In 1999, GMAC hired Safelite Solutions to administer its auto glass program, and Safelite began communicating lower prices that GMAC would pay for services.
- For each claim, Safelite would send Cascade a confirmation fax that stated the price GMAC would pay for the service.
- These faxes included the explicit statement: 'Performance of services constitutes acceptance of the above price ....'
- Cascade repeatedly disputed the prices stated in the faxes but proceeded to perform the windshield repair or replacement services.
- After performing the services, Cascade would bill GMAC at its own higher rates, not the rates specified by Safelite.
Procedural Posture:
- GMAC filed an action for declaratory judgment against Cascade Auto Glass, Inc. in a North Carolina trial court on February 15, 2005.
- Cascade filed a counterclaim against GMAC for breach of contract on March 21, 2005.
- On September 29, 2006, GMAC moved for summary judgment.
- The trial court granted summary judgment in favor of GMAC by an order filed on April 5, 2007.
- Cascade Auto Glass, Inc. (appellant) appealed the trial court's grant of summary judgment to the Court of Appeals of North Carolina, with GMAC (appellee) responding.
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Issue:
Does an auto glass company's performance of repair services, after receiving a clear offer stating the price and that performance constitutes acceptance, create a binding unilateral contract at the offered price, even if the company verbally protests the price?
Opinions:
Majority - Judge Jackson
Yes. A binding unilateral contract is formed at the offered price when an offeree performs the specific act designated as acceptance in the offer, notwithstanding the offeree's verbal protests to the offer's terms. The court reasoned that an offeror is the 'master of his offer' and is entitled to define the terms of acceptance. In this case, GMAC's offer, communicated through Safelite's faxes, clearly stated that 'performance of services constitutes acceptance of the above price.' By performing the requested repairs, Cascade accepted the terms of GMAC's offers, forming valid unilateral contracts at GMAC's stated prices. Cascade's verbal protests were legally ineffective to alter the terms because their conduct—performance—constituted a valid acceptance as defined by the offeror. Therefore, GMAC paid the correct amounts pursuant to the contracts, and Cascade was not entitled to any further payment.
Analysis:
This case strongly affirms the principle that conduct can override conflicting verbal statements in the formation of a unilateral contract. It clarifies that an offeree cannot cherry-pick the terms of an offer by accepting through the designated mode of performance while simultaneously rejecting a core term like price. The decision provides legal certainty for businesses that structure offers around acceptance-by-performance, ensuring that if the offeree proceeds with the act, they are bound by all terms of the offer. For offerees, it serves as a stark reminder that the proper way to reject an unacceptable offer is to refuse performance, not to perform and then litigate the terms.
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