Yoder v. Rock Island Bank
362 N.E.2d 68, 5 Ill. Dec. 755, 47 Ill. App. 3d 486 (1977)
Rule of Law:
A written proposal constitutes a binding offer if it is sufficiently clear and definite to provide a basis for determining a breach and giving an appropriate remedy, even if it omits minor terms that can be implied by custom, reasonableness, or established through part performance. Acceptance of such an offer can be accomplished by performing the acts requested in the offer, thereby creating an enforceable contract.
Facts:
- In July 1973, John T. and Joyce F. Yoder executed three construction mortgages to The Rock Island Bank on Lots 1, 2, and 5.
- The bank advanced funds for the house on Lot 1 but did not advance any money for the mortgages on Lots 2 and 5.
- In November 1974, Mr. Yoder discussed his financial obligations with Arvid Johnson, a vice president at the bank.
- On November 29, 1974, the bank's attorney, H. Reed Doughty, sent a letter to the Yoders' attorney, proposing that if the Yoders conveyed 'good title' to Lot 1 to the bank, the bank would release the mortgages on all three lots plus a separate judgment.
- The letter invited the Yoders' attorney to 'please advise at your earliest convenience' or 'furnish me with abstract of title or commitment for title insurance' if the Yoders were willing.
- Following receipt of the letter, the Yoders recorded a deed on December 9, 1974, conveying Lot 1 to the bank.
- The Yoders also procured a commitment for title insurance naming the bank as the insured, which was received by Doughty.
- On December 20, 1974, Doughty sent a second letter stating the bank's president was unhappy with the terms and wished to revoke the proposal.
Procedural Posture:
- John T. and Joyce F. Yoder sued The Rock Island Bank in the Circuit Court of Rock Island County, seeking specific performance of an alleged agreement.
- The Rock Island Bank filed a separate foreclosure action against the Yoders regarding the mortgage on Lot 1.
- The trial court consolidated the two cases.
- The trial court entered judgment in favor of The Rock Island Bank in the specific performance action and entered a decree of foreclosure for the bank in the second action.
- The Yoders, as appellants, appealed both judgments to the appellate court.
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Issue:
Does a letter from one party's attorney to another, which outlines specific terms for resolving a dispute by conveying property in exchange for releasing mortgages, constitute a legally binding offer that can be accepted by performance before it is revoked?
Opinions:
Majority - Mr. Justice Barry
Yes. A letter from an attorney outlining specific terms for resolving a dispute constitutes a legally binding offer, and when the other party accepts by performing the requested acts before any revocation, a specifically enforceable contract is created. The court reasoned that the bank's November 29 letter was an offer, not merely a step in negotiations, because its terms were reasonably certain and provided a basis for determining a breach. The court dismissed the bank's arguments that the letter was too vague, finding that the identity of the parties was clear, and minor omitted terms—like the exact amount of title insurance or a performance timeline—could be supplied by custom, reasonableness, or the plaintiffs' subsequent part performance. The Yoders accepted the offer by performing the requested acts—recording the deed and furnishing the title commitment—before the bank's attempted revocation on December 20, which was therefore ineffective. The court also found that the existing liens on the property did not prevent specific performance because they were the types of encumbrances that could be cleared at a closing.
Analysis:
This decision clarifies the threshold for what constitutes a legally binding offer versus a mere invitation to negotiate, particularly in the context of correspondence between attorneys. The court demonstrates a willingness to look to substance over form, implying reasonable terms where they are omitted to prevent a party from escaping an agreement on a technicality. The case reinforces the principle that part performance can cure uncertainty in an offer and serve as a valid method of acceptance, solidifying a contract and making a subsequent attempt to revoke ineffective. This precedent is significant for contract formation cases, showing that actions taken in reliance on a detailed proposal can create an enforceable agreement.
