Ragosta v. Wilder
592 A.2d 367 (1991)
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Rule of Law:
An offeree's acts of preparation to perform do not constitute the beginning of performance necessary to render a unilateral contract offer irrevocable. For a unilateral offer to become an irrevocable option contract under Restatement (Second) of Contracts § 45, the offeree must begin the actual performance invited by the offeror.
Facts:
- In 1987, plaintiffs, Ragosta, became interested in purchasing 'The Fork Shop' from defendant, Hart.
- Ragosta sent Hart a letter with a $2,000 check to purchase the property.
- By letter dated September 28, 1987, Hart returned the check and made a counter-offer to sell the property for $88,000, stating the offer was valid until November 1, 1987, conditioned on Ragosta appearing at the Randolph National Bank with the funds, and providing the property had not already been sold.
- On October 1st, Ragosta called Hart, stated the terms were acceptable, and began arranging for bank financing, incurring costs in the process.
- Hart assured Ragosta that no one else was currently interested in the property.
- On October 8th, before the deadline and before Ragosta had tendered the money, Hart called Ragosta and revoked the offer to sell.
- On October 15th, Ragosta appeared at the specified bank with the $88,000 purchase price, but Hart did not appear.
Procedural Posture:
- Plaintiffs sued defendant for specific performance in the trial court.
- The trial court found for the plaintiffs, concluding that an enforceable contract existed because plaintiffs' reliance and beginning of performance made the defendant's offer irrevocable.
- The trial court ordered defendant to convey the property to plaintiffs for the offered price.
- Defendant, as appellant, appealed the trial court's judgment to the Vermont Supreme Court.
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Issue:
Do an offeree's actions in preparation for performance, such as securing financing, constitute the beginning of performance of a unilateral contract sufficient to make the offer irrevocable?
Opinions:
Majority - Peck, J.
No. An offeree's acts in preparation for performance do not constitute acceptance or the beginning of performance sufficient to make a unilateral offer irrevocable. The offer was for a unilateral contract, which could only be accepted by performance—appearing at the bank with the $88,000. Ragosta’s actions in securing financing were merely preparations to perform, not the beginning of the invited performance itself. Under Restatement (Second) of Contracts § 45, an option contract is created only when the offeree begins the actual invited performance. Because Ragosta had only prepared to perform, Hart was free to revoke the offer. The court also rejected the application of equitable estoppel because Ragosta was aware of the true facts, namely that the offer was contingent and not guaranteed. The case is remanded for the trial court to consider a remedy under the separate doctrine of promissory estoppel, which requires determining if injustice can only be avoided by enforcing the promise.
Analysis:
This case clarifies the critical distinction between mere preparation for performance and the beginning of actual performance required to make a unilateral offer irrevocable under Restatement § 45. It establishes that preparatory acts, such as obtaining financing, are not sufficient to bind the offeror. The decision reinforces that offerors retain the power of revocation until the offeree begins the specific performance requested. Furthermore, it highlights the distinct analytical path for promissory estoppel, separating it from contract formation and focusing on reliance and the prevention of injustice, potentially allowing for reliance damages even when no contract is formed.
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