Gresser v. Hotzler
604 N.W.2d 379 (2000)
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Rule of Law:
Under the mirror image rule, an acceptance must be coextensive with the offer and may not introduce new or different terms. An acceptance that alters material terms of an offer, such as performance dates in a real estate contract, constitutes a counteroffer that rejects the original offer.
Facts:
- In early 1998, Michael Gresser began negotiating to purchase commercial property from Calvin and Cheryl Hotzler.
- In July 1998, Gresser submitted a proposed purchase agreement to the Hotzlers.
- On August 4, 1998, the Hotzlers changed several terms, initialed the changes, signed the agreement, and returned it to Gresser's attorney, creating a counteroffer.
- On August 10, Gresser initialed the Hotzlers' changes and signed the purchase agreement.
- At the same time, Gresser made two additional changes: he altered the survey delivery date from August 10 to September 10 and the closing date from September 1 to October 15, initialing both changes.
- On August 12, Gresser's attorney returned the newly altered agreement and earnest money to the Hotzlers' realtor.
- Later on August 12, Calvin Hotzler received the document but did not read it. He then showed Gresser the property and introduced him to tenants as the new buyer.
- On August 13, the Hotzlers reviewed Gresser's altered agreement alongside a new, separate offer from another party, and they chose to accept the new offer.
Procedural Posture:
- Michael Gresser sued Calvin and Cheryl Hotzler in district court, seeking specific performance of the purchase agreement and, alternatively, damages for breach of contract.
- The Hotzlers moved for partial summary judgment on Gresser's specific-performance claim.
- The district court granted the Hotzlers' motion, ruling that the purchase agreement was invalid, and entered a final judgment dismissing both of Gresser's claims.
- Gresser, as the appellant, appealed the district court's judgment to the Court of Appeals of Minnesota.
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Issue:
Does a party's response to a counteroffer that accepts existing terms but alters the dates for performance constitute a valid acceptance that forms a binding contract under the mirror image rule?
Opinions:
Majority - Lansing, Judge
No. A response to an offer that alters material terms is not an acceptance but a new counteroffer. Under Minnesota's mirror image rule, an acceptance must be 'coextensive with the offer' and cannot introduce new terms. When Gresser initialed the Hotzlers' changes but then altered the survey and closing dates, his response did not mirror the Hotzlers' counteroffer. Instead, Gresser's changes constituted a new counteroffer, which the Hotzlers were free to accept or reject. The changes to the performance dates were material, not merely suggestions, because they substantially altered the performance obligations of the parties. Few terms are more important to a seller of real estate than the date of payment, a fact underscored by the agreement's time-is-of-the-essence clause. Therefore, because Gresser's response was a counteroffer that was never accepted by the Hotzlers, no binding contract was formed.
Analysis:
This case reaffirms the strict application of the common law mirror image rule in the context of real estate transactions. The court's decision establishes that changes to performance dates are considered material variations that transform a purported acceptance into a counteroffer, thereby terminating the original offer. This creates a bright-line rule that promotes certainty in real estate negotiations, cautioning parties that any modification, even one that seems practical or minor, must be explicitly accepted to form a binding contract. The ruling emphasizes that courts will look to the objective manifestations of the parties' actions, as reflected on the face of the contract, rather than their subjective intentions.
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