Southworth v. Oliver

Oregon Supreme Court · Contracts

ContractsOffer and AcceptanceSpecific PerformanceStatute of Fraudsobjective theory of assentprice quotationofferacceptance

Facts

Defendants decided to sell part of their Bear Valley ranch property and discussed that possibility with plaintiff, a neighboring rancher who said he was very interested in the land. After preliminary discussions identifying the property and after plaintiff indicated he was arranging financing, defendants mailed plaintiff a June 17, 1976 letter enclosing a writing stating they were 'Selling approximately 2933 Acres' at a stated total price, with stated down payment, installment terms, interest rate, and possible sale dates; the enclosure also separately listed grazing permits. Plaintiff promptly replied on June 21, 'I accept your offer' as to the land in Bear Valley. Defendants then sent a June 24 letter asserting the earlier writing was only informational and not a firm offer, leading plaintiff to sue for specific performance.

Issue

Whether defendants' June 17 writing, viewed in context, was an offer to sell the ranch lands; whether plaintiff's June 21 response was an effective acceptance creating a binding contract for the land; whether the agreement was sufficiently definite for specific performance despite no agreed security device; and whether defendants could raise the statute of frauds for the first time on appeal.

Rule

Whether a communication is an offer is determined objectively: the question is what a reasonable person in the offeree's position would understand from the words and conduct of the parties under all surrounding circumstances. A price quotation is not ordinarily an offer standing alone, but it may become an offer if it is sufficiently definite and circumstances justify the offeree in believing assent will conclude the bargain. If the parties have expressed sufficient intent to make a valid contract, a court of equity may supply subordinate details of performance, such as standard security provisions, in decreeing specific performance. A statute of frauds defense, being waivable, cannot be raised for the first time on appeal when it was not presented in the trial court.

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

In Boise, Lydia Morrow told her neighboring farmer, Evan Pike, that she had decided to sell a specific 180-acre tract bordering his property and would send him the price once she finished reviewing county records. Two weeks later, after Evan told her he had financing ready, Lydia mailed him a signed letter identifying the tract by township and range, stating a total price, 25% down, the balance over four years at 7% interest, and a proposed closing date, and invited him to call with questions.

If Evan immediately mails back, "I accept your offer," and Lydia later claims the letter was only a price quote, which is the best analysis?

Explanation. The majority applied an objective test: whether a reasonable person in the offeree's position, under all surrounding circumstances, would believe assent would conclude the bargain. A price quotation is not ordinarily an offer standing alone, but it may become one when prior conversations, a definite addressee, and detailed terms justify that understanding. Subjective undisclosed intent is not controlling. (Derived from Southworth v. Oliver (n.d.).)