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Hendricks v. Behee

Missouri Court of Appeals, Southern District, Division Two
786 S.W.2d 610 (1990)
ELI5:

Rule of Law:

For a binding contract to be formed, the offeree's acceptance of an offer must be communicated to the offeror. An offeror may revoke their offer at any time before they receive notice of the acceptance.


Facts:

  • Eugene Behee and Artice and Pearl Smith engaged in unproductive negotiations for the sale of the Smiths' real estate.
  • On March 2, 1987, Behee made a written offer to purchase the property and sent it to the Smiths' real estate agent.
  • On March 3, the agent mailed the offer to the Smiths, who lived in a different state.
  • On March 4, the Smiths signed the purchase agreement, thereby accepting the offer.
  • Between March 5 and March 7, before Behee had received any notice that the Smiths had accepted his offer, Behee contacted the Smiths' real estate agent and stated that he was withdrawing his offer.

Procedural Posture:

  • Steve L. Hendricks, an escrow agent holding a $5,000 deposit, filed an interpleader action in a Missouri trial court against Eugene Behee (the buyer) and Artice and Pearl Smith (the sellers).
  • Behee filed a cross-claim against the Smiths, seeking the return of his deposit.
  • After a nonjury trial, the trial court awarded the escrow agent his fees and ordered that the balance of the deposit be returned to Behee.
  • The Smiths, as appellants, appealed the trial court's judgment to the Missouri Court of Appeals, Southern District. Behee is the appellee.

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Issue:

Does a binding contract form when an offeree signs a purchase agreement but fails to communicate that acceptance to the offeror before the offeror communicates a revocation of the offer to the offeree's agent?


Opinions:

Majority - Flanigan, Presiding Judge

No. A binding contract does not form until acceptance of an offer is communicated to the offeror. The court reasoned that an uncommunicated intention to accept, such as the Smiths' private act of signing the agreement in Mississippi, does not constitute a valid acceptance. An offer that is not supported by consideration can be withdrawn by the offeror at any time before acceptance has been communicated to them. Here, Behee revoked his offer by notifying the Smiths' agent, which constitutes notice to the Smiths. Since this revocation occurred before Behee was notified of the Smiths' acceptance, no contract was formed, and the revocation was effective.



Analysis:

This case reinforces the fundamental contract law principle that acceptance is not effective upon the offeree's private assent but upon the communication of that assent to the offeror. It clarifies that until the 'magic moment' of communicated acceptance, the offeror retains full power to revoke the offer. The ruling also underscores the legal tenet of agency law that notice provided to an agent within the scope of their authority is imputed to the principal. This decision serves as a clear guidepost for determining when a contract is formed, emphasizing that the risk of a delayed or failed communication of acceptance lies with the offeree.

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