Keller v. Bones
615 N.W.2d 883 (2000)
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Rule of Law:
When a written offer specifies that it becomes a binding contract upon execution by the offeree, acceptance is effective when the offeree signs the document within the offer's time limit, provided that acceptance is communicated to the offeror within a reasonable time thereafter.
Facts:
- Calvin R. and Audrey J. Bones (the Boneses) listed their ranch for sale with a real estate agent.
- On July 17, 1997, Dean Keller submitted a written offer to purchase the ranch for $490,000.
- Keller's offer stipulated it would be withdrawn if not accepted by 5:00 p.m. on July 21, 1997.
- The offer contained a clause stating, 'Upon execution by Seller, this agreement shall become a binding contract.'
- At 4:53 p.m. on July 21, the Boneses signed the offer and faxed the signed copy to their own real estate agent.
- At 5:12 p.m. on July 21, the Boneses' agent left a voicemail for Keller, informing him that the offer had been accepted.
- The following day, another party, Lydic Brothers, offered to match Keller's offer, and the Boneses wished to accept this new offer.
- The Boneses' agent contacted Keller to ask if he would 'back out' of the agreement, but Keller refused and asserted the sale should proceed.
Procedural Posture:
- Dean Keller sued Calvin and Audrey Bones in the district court for Lincoln County, Nebraska, seeking specific performance of the purchase agreement.
- All parties filed motions for summary judgment.
- The district court granted summary judgment for the Boneses (sellers), finding no valid contract was formed because acceptance was not communicated before the offer's deadline.
- Keller (appellant) appealed the district court's judgment to the Nebraska Court of Appeals.
- The Nebraska Court of Appeals affirmed the district court's decision, holding that communication of acceptance was required before the 5 p.m. deadline.
- Keller (petitioner) sought further review from the Supreme Court of Nebraska.
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Issue:
Does a binding contract form when an offer, which states it becomes a binding contract 'upon execution by Seller,' is signed by the seller before the offer's stated deadline, but notice of the acceptance is communicated to the buyer after the deadline has passed?
Opinions:
Majority - Stephan, J.
Yes, a binding contract was formed. The plain language of the offer established that acceptance occurred upon the seller's execution of the document, not upon communication to the buyer. The offer's 5:00 p.m. deadline applied only to the act of signing, which the sellers completed in a timely manner at 4:53 p.m. Because the offer was silent as to the time for communicating the acceptance, the law implies a requirement that communication occur within a reasonable time. The agent's voicemail to the buyer just 12 minutes after the deadline was well within a reasonable time. Furthermore, the parties' subsequent conduct, such as the sellers' agent asking the buyer to 'back out' of the deal, was consistent with the existence of a valid contract.
Analysis:
This decision clarifies the 'master of the offer' principle, affirming that an offeror can dictate the specific terms of acceptance, thereby altering common law default rules. The court's distinction between the act of acceptance (signing) and the communication of that acceptance is significant, establishing that if an offer is silent on the timing of communication, a 'reasonable time' standard will apply even if communication occurs after the offer's explicit deadline for acceptance. This case underscores the critical importance of precise drafting in contracts, as the specific phrase 'upon execution by Seller' was dispositive. Future cases involving similar language will likely follow this precedent, focusing on the offeror's intent as expressed in the document rather than on a rigid application of the communication rule.
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