Pride v. Lewis

Missouri Court of Appeals, Western District
179 S.W.3d 375 (2005)

ELI5:

Rule of Law:

An acceptance that varies the terms of the original offer constitutes a counteroffer, which requires unequivocal acceptance by the original offeror to form a contract. Mere silence or inaction by the original offeror, without the receipt of benefits or services under the new terms, does not constitute acceptance of the counteroffer.

Facts:

Andrew and Joyce Kay Pride owned a house they listed for sale.
Larry L. Lewis made an offer to purchase the house for $55,000, which he signed on April 9, 2003.
The contract signed by Lewis specified a closing date of May 15, 2003 and listed both him and his wife, Issoline Lewis, as buyers, though she never signed.
On April 11, 2003, the Prides signed the contract but handwrote a change to the closing date, moving it to June 1, 2003.
The Prides initialed their handwritten change, but neither Larry Lewis nor Issoline Lewis ever initialed or otherwise signed off on the new date.
Based on the modified contract, the Prides informed their tenant to vacate the property by June 1, 2003.
Lewis was aware that the closing was intended to occur in 'early June' but failed to appear at the closing.
After the failed closing, Lewis never requested the return of his $1500 earnest money deposit.

Procedural Posture:

Andrew and Joyce Kay Pride sued Larry L. Lewis for breach of contract in the Circuit Court of Nodaway County, Associate Circuit Division (trial court).
The trial court found in favor of the Prides and entered a judgment awarding them $20,900 in damages.
Larry L. Lewis (appellant) appealed the trial court's judgment to the Missouri Court of Appeals, Western District (intermediate appellate court).

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Issue:

Does an offeree's silence and inaction constitute acceptance of a counteroffer in a real estate contract when the offeree does not explicitly assent to a material change made by the offeror and does not receive any benefits or services under the new terms?

Opinions:

Majority - Robert G. Ulrich

No. An offeree's silence and inaction do not constitute acceptance of a counteroffer where there is no explicit assent to a material change and no receipt of benefits. The court reasoned that contract formation requires a definite offer and a 'mirror-image' acceptance. When the Prides changed the closing date, a material term, their purported acceptance was legally a rejection of Lewis's offer and a new counteroffer. For a contract to be formed, Lewis then had to unequivocally accept this counteroffer. The Prides argued Lewis accepted through his conduct: failing to object, knowing the closing was in June, and not seeking the return of his earnest money. However, the court held that as a general rule, silence does not constitute acceptance. The exception where conduct can imply acceptance typically applies only when an offeree receives services or benefits in silence when they had an opportunity to reject them. Because Lewis received no such benefit, his inaction did not manifest assent, and no contract was ever formed.

Analysis:

This decision reaffirms the common law 'mirror-image rule,' emphasizing that any deviation from the original offer's terms creates a counteroffer, not an acceptance. It clarifies the narrow scope of the 'acceptance by conduct' doctrine, limiting its application primarily to situations where a party silently accepts tangible services or benefits. The ruling serves as a strong caution for parties in contract negotiations, particularly in real estate, to obtain explicit, written assent for all material changes rather than relying on the other party's silence. This precedent reinforces the need for clear communication and mutual assent to prevent ambiguity and ensure the enforceability of contracts.

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