Marchiondo v. Scheck

New Mexico Court of Appeals · Contracts

Contractsunilateral contractrevocationpart performanceoption contractbroker commissionagencyreal estate broker

Facts

Defendant made a written offer to sell real estate to a specified prospective buyer and agreed to pay plaintiff broker a percentage commission if the sale occurred. The offer allowed six days for acceptance. On the morning of the sixth day, defendant's written revocation was received by plaintiff. Later that day, plaintiff obtained the prospective purchaser's acceptance and claimed defendant breached the agreement by revoking.

Issue

When an offeror makes an offer for a unilateral contract to a broker, does the offeror have the right to revoke before full performance if the broker has already begun partial performance? More specifically, did defendant's right to revoke depend on whether plaintiff had partially performed before receiving the revocation?

Rule

An offer to pay a broker a commission upon sale is an offer for a unilateral contract. Although such an offer may generally be revoked before the requested performance is received, once the offeree begins partial performance pursuant to the offer, a contract with a condition, or option contract, arises; the offer then becomes irrevocable during the stated time, and the offeror's duty is conditional on the offeree's full performance in accordance with the offer. Whether there has been partial performance is a question of fact that depends on the circumstances and the authority given.

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

In Phoenix, Elena Torres signed a writing stating that if broker Malik Reed produced a sale of her warehouse to Dana Kline within five days, Elena would pay Malik a 4% commission. On day three, before Malik contacted Dana or took any authorized step toward obtaining Dana's assent, Elena sent Malik a revocation, which he received that afternoon.

If Malik sues for the commission after later obtaining Dana's agreement within the five-day period, what is the strongest analysis?

Explanation. The writing promised a commission only if the broker produced the requested act—a sale—so it was an offer for a unilateral contract. Under the majority rule adopted here, the offeror may revoke before the offeree begins partial performance pursuant to the offer. Because Malik had taken no authorized steps toward performance before receiving the revocation, no option or conditional contract arose, and Elena retained the right to revoke.