Robert M. Lee v. Graceia Voyles
1990 U.S. App. LEXIS 4693, 898 F. 2d 76, 11 U.C.C. Rep. Serv. 2d (West) 7 (1990)
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Rule of Law:
A counteroffer acts as a rejection that terminates the original offer's power of acceptance. Furthermore, under the Uniform Commercial Code's Statute of Frauds, a contract for the sale of goods for $500 or more is not enforceable without a writing signed by the party against whom enforcement is sought.
Facts:
- Wayne Golomb and his family owned a rare 1954 Ferrari known as the 'King Leopold Ferrari'.
- Robert M. Lee, an avid car collector, expressed a strong desire to purchase the vehicle.
- Wayne Golomb told Lee it would take $275,000 to buy the car.
- Lee made a counteroffer of $175,000, which Golomb rejected.
- After Golomb rejected several of Lee's subsequent, increasing offers, Lee eventually offered the full $275,000 on October 16.
- In response to the $275,000 offer, Golomb did not state 'I accept', but instead said he would take the offer to his parents for their approval.
- Golomb instructed Lee to make out four checks to various family members, which Lee did.
- On October 21, Golomb sent Lee a letter stating that after speaking with his parents, 'the car will not be sold', and returned the checks.
Procedural Posture:
- Robert M. Lee filed a diversity suit in federal court against Wayne Golomb and his family, seeking specific performance to compel the sale of the Ferrari.
- The defendants (Golombs) moved to dismiss for lack of jurisdiction, but the motion was denied.
- The case was tried by a magistrate judge in a bench trial, by consent of the parties.
- The magistrate judge found that no contract had been formed and entered judgment for the defendants.
- Lee, the plaintiff, appealed the magistrate's decision to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Did the parties form an enforceable contract for the sale of a car when the buyer rejected the seller's initial offer with a counteroffer, and the seller did not unequivocally accept the buyer's subsequent offer that matched the initial price, and where no writing confirming a sale was signed by the seller?
Opinions:
Majority - Easterbrook, Circuit Judge
No, an enforceable contract was not formed. When Lee made a counteroffer of $175,000, it acted as a rejection of Golomb's original $275,000 offer, thereby terminating it. Lee's subsequent offer of $275,000 was a new offer, not an acceptance. The trial court's finding that Golomb never unequivocally accepted this new offer, but instead conditioned it on his parents' approval, was not clearly erroneous. Separately, the alleged contract is unenforceable under the Uniform Commercial Code's Statute of Frauds, which requires a contract for the sale of goods over $500 to be in writing and signed by the party against whom enforcement is sought. The only document Golomb signed was the letter explicitly denying that a contract had been made.
Analysis:
This decision reinforces two fundamental principles of contract law: the 'rejection-by-counteroffer' rule and the UCC Statute of Frauds. It clarifies that once an offer is rejected through a counteroffer, it cannot be revived and accepted later; any subsequent attempt to agree to the original terms constitutes a new offer. The case serves as a stark reminder of the strict requirement for a signed writing for the sale of valuable goods, demonstrating that extensive negotiations and even an agreement on price are insufficient to overcome the statute's formal requirements if the party to be charged has not signed a document indicating a contract was made.
