Bretz v. Portland General Electric Co.

United States Court of Appeals for the Ninth Circuit · 1989 · Contracts

882 F.2d 411 (1989)

Updated July 31, 2026

contractsstatute of fraudsoffer and acceptanceequitable estoppelMontana statute of fraudssale of securitiesmutual assentobjective manifestations

Facts

Bretz offered to buy PGE's stock in its wholly-owned subsidiary, Beartooth Coal Company, and the parties exchanged several letters negotiating price and terms. In PGE's August 23, 1983 letter, PGE said it would be receptive to an offer of $2,750,000, noted problems with Bretz's prior offer, and asked him to resubmit his offer on that basis. Bretz then sent an August 29 letter captioned "Acceptance of Offer," asserting that PGE had made a counteroffer and that a contract existed. Before PGE received that letter, Bretz entered into a third-party agreement to sell coal from the Beartooth property and later claimed PGE breached the stock-sale contract.

Issue

Did the parties' letters and related communications create an enforceable contract satisfying Montana's statute of frauds for the sale of securities? If not, could PGE nonetheless be equitably estopped from asserting the statute of frauds because Bretz relied on PGE's representations?

Rule

Under Montana law, multiple writings may be read together to satisfy the statute of frauds, but together they must contain all essential elements of a contract, including evidence of the parties' assent to be bound. Mutual assent is determined objectively from outward manifestations, and parol evidence may explain ambiguities but may not supply an essential contract term. When the instrument itself negates the existence of a contract by showing only further negotiations or an invitation to submit an offer, it cannot satisfy the statute of frauds. Equitable estoppel against a statute of frauds defense requires that a contract already exist, either orally or in writing.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Billings, Montana, Nora Ellis sent Copper Basin Holdings a signed letter offering to buy all shares of its mining subsidiary for $4 million and proposing a detailed closing procedure. Copper Basin replied, "We would be receptive to an offer of $4.6 million if the matter could close promptly under the procedure you suggested. Please resubmit your offer on that basis." Nora then mailed back a document titled "Acceptance of Counteroffer."

If Nora sues for breach, what is the strongest argument that no enforceable contract satisfying Montana's statute of frauds was formed?

Explanation. Under the majority rule, multiple writings may be read together, but they must contain all essential elements of a contract, including objective evidence of mutual assent. Language stating the seller would be "receptive to an offer" and asking the buyer to "resubmit" the offer objectively indicates continued negotiations rather than a firm offer. Because the writing negates present intent to be bound, it cannot satisfy the statute of frauds.