Ragosta v. Wilder

Supreme Court of Vermont · Contracts

Contractsoffer and revocationconsiderationoptionbeginning performancepreparation for performancetenderequitable estoppel elements

Facts

Defendant sent plaintiffs a letter offering to sell a property called "The Fork Shop" for $88,000 if, before November 1, 1987, plaintiffs appeared with that sum at the Randolph National Bank, where a certified deed would be delivered, provided the property had not been sold. Defendant returned plaintiffs' earlier $2,000 check and stated he would not sign an acceptance because that would tie up both properties he had for sale. Plaintiffs sought financing, told defendant they would come to close, and incurred loan-related expenses, but before they tendered the purchase price defendant told them he was no longer willing to sell. Plaintiffs nonetheless appeared at the bank on October 15 with the purchase money, and defendant did not appear.

Issue

Whether defendant's written offer became enforceable before tender of the purchase price because plaintiffs had begun obtaining financing, and whether defendant's revocation could be barred by equitable estoppel or sustained against challenge under promissory estoppel principles. The case also asked whether the trial court properly ordered conveyance of the property.

Rule

A promise to keep an offer open is not enforceable without consideration. When an offer invites acceptance only by performance, an option contract arises under Restatement (Second) of Contracts § 45 only when the offeree tenders or begins the invited performance, and mere preparation for performance is not enough. Equitable estoppel requires that the party asserting estoppel be ignorant of true facts known to the party to be estopped. Promissory estoppel may enforce a promise only if it induced action of a definite and substantial character and injustice can be avoided only by enforcement, with relief limited as justice requires.

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

In Columbus, Ohio, Nora Bennett mailed Liam Porter an offer to buy his warehouse for $240,000 and included a $5,000 check. Liam returned the check and wrote back: "I will sell if you appear at Summit County Title with the full price by July 1; until then I will keep this open unless I sell first."

If Liam revokes the offer on June 20 before Nora appears with the money, which is the best analysis?

Explanation. A promise to keep an offer open is not enforceable without consideration. Here, the seller returned the proposed payment and received no bargained-for consideration for the promise to hold the offer open, so the promise was revocable before acceptance unless some estoppel theory applies. (Derived from Ragosta v. Wilder (n.d.).)