Pae Young Chung v. Byong Jik Choi
335 F. App'x 172 (2009)
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Rule of Law:
A response to an offer that purports to be an acceptance but adds a new, material condition is not an acceptance but a counteroffer. A binding contract is not formed until the new condition is accepted by the original offeror.
Facts:
- Pae Young Chung and Suk Chung (the Chungs) operated a restaurant in a property they leased from Byong Jik Choi and In Sok Choi (the Chois).
- In 2006, the Chungs decided to sell their restaurant business and began negotiating with the Chois regarding the lease terms that would be offered to a potential buyer.
- On April 20, 2006, the Chungs, through their attorney, submitted a counteroffer to the Chois detailing specific lease terms for a new tenant.
- On April 29, 2006, the Chois' son responded via email, stating the Chungs' terms "look fine" but added a new condition: "let’s look at the new tenant’s credit report before we accept the offer in it’s [sic] entirety however."
- The Chungs subsequently found a purchaser for their business.
- When the purchaser approached the Chois, the Chois offered lease terms that were materially less favorable than those previously discussed with the Chungs.
- The purchaser rejected the less favorable terms, causing the sale of the Chungs' business to collapse.
Procedural Posture:
- Pae Young Chung and Suk Chung sued Byong Jik Choi and In Sok Choi in the United States District Court for the Eastern District of Pennsylvania.
- The Chungs' complaint alleged breach of contract and tortious interference with a contract.
- The case was tried before the District Court in a bench trial (without a jury).
- The District Court found in favor of the defendants, the Chois, holding that no binding agreement was formed.
- The Chungs, as appellants, appealed the District Court's final judgment to the United States Court of Appeals for the Third Circuit, with the Chois as appellees.
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Issue:
Does a response to an offer that agrees to existing terms but introduces a new, material condition, such as the right to review a future party's credit report, constitute a valid acceptance that forms an enforceable contract?
Opinions:
Majority - Judge Greenberg
No. A response to an offer which adds a new condition is not an acceptance but a counteroffer, and therefore does not form a binding contract. The Chois' April 29th email, by introducing the condition of reviewing a future tenant's credit report before accepting the offer in its entirety, was not an unconditional acceptance of the Chungs' proposed terms. This new condition converted the Chois' response into a counteroffer. Because the Chungs never expressed their agreement to this new, open-ended credit report provision, no binding agreement was ever formed obligating the Chois to offer specific lease terms to a new tenant.
Analysis:
This case serves as a straightforward application of the fundamental contract principle of the 'mirror image rule,' where an acceptance must exactly mirror the terms of the offer. Although a non-precedential opinion, it provides a clear example of how adding a seemingly reasonable condition—a credit check—can prevent the formation of a contract by converting a purported acceptance into a counteroffer. The decision reinforces that parties must achieve a meeting of the minds on all material terms, and any qualification or new condition introduced during acceptance must be assented to by the original offeror to create a binding agreement.
