Gregory and Appel, Inc. v. Duck
459 N.E.2d 46, 1984 Ind. App. LEXIS 2285 (1984)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An acceptance must correspond with the terms of the offer in every respect. An acceptance that varies the terms of an offer constitutes a rejection and operates as a counteroffer, which the original offeror must then accept to form a binding contract.
Facts:
- Donald Duck, acting as attorney for his family (the Ducks), owned the Colonial Apartments.
- Duck sent a letter to Gregory and Appel, Inc. setting forth the terms of an offer that the Ducks would find acceptable for the purchase of the property, describing it as an invitation for a 'proposal.'
- In response, Gregory and Appel submitted a document explicitly titled 'OFFER TO PURCHASE REAL ESTATE.'
- This document submitted by Gregory and Appel contained several terms that were not identical to those in the Ducks' letter and also included additional terms not specified in the letter.
- The Ducks rejected this proposed contract.
- Gregory and Appel then submitted a second, slightly modified but otherwise identical, proposed contract.
- Gregory and Appel also tendered a $10,000 earnest money check with their proposal.
- The Ducks rejected the second proposed contract and returned the earnest money check.
Procedural Posture:
- Plaintiff, Gregory and Appel, Inc., filed a complaint in an Indiana trial court against defendants, Donald Duck and his family.
- The complaint sought a declaratory judgment that a contract for the sale of real estate existed and also requested specific performance.
- The Ducks filed a Trial Rule 12(C) motion for judgment on the pleadings.
- The trial court granted the Ducks' motion for judgment on the pleadings.
- Gregory and Appel, as appellant, appealed the trial court's judgment to the Indiana Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a letter outlining acceptable terms for a property sale, which the sender calls a 'solicitation of an offer,' combined with a responsive document labeled 'Offer to Purchase' that contains different and additional terms, create an enforceable contract?
Opinions:
Majority - Sullivan, J.
No, a letter soliciting a proposal, followed by a responsive document labeled as an offer containing varied terms, does not create an enforceable contract. The court reasoned that for a contract to exist, there must be an offer and an acceptance that meets the terms of the offer in every respect. Here, the Ducks' initial letter was a solicitation of an offer, not an offer itself. More significantly, Gregory and Appel's responsive document was explicitly titled 'OFFER TO PURCHASE,' making it the true offer in the transaction. Because the Ducks rejected this offer, no contract was formed. Furthermore, even if the Ducks' letter were construed as an offer, Gregory and Appel's response contained divergent and additional terms, making it a rejection and a counteroffer under the common law 'mirror image' rule, not an acceptance. As the Ducks never accepted the counteroffer, no mutual assent was reached and no contract was formed.
Analysis:
This decision reaffirms fundamental principles of contract formation, particularly the distinction between an offer and an invitation to negotiate. It underscores the importance of the 'mirror image rule,' which requires an acceptance to be an unconditional assent to the exact terms of the offer. The court's emphasis on how the parties themselves characterized their documents (e.g., 'solicitation of an offer,' 'Offer to Purchase') provides a clear guideline for future cases, indicating that such labels can be dispositive in determining legal intent. This case serves as a straightforward illustration for law students that preliminary negotiations do not create binding obligations and that any deviation in the acceptance creates a counteroffer, thereby terminating the original power of acceptance.
