Does a seller's letter responding to a prospective buyer's inquiries, stating a rock-bottom price and warning that the buyer must decide fast because another buyer is expected, constitute a definite offer capable of acceptance so as to form a binding contract?

In March 1952, Albert Scolnick, who lived in New York, placed an advertisement in a Los Angeles paper describing 40 acres near Joshua Tree and stating he needed cash and would sacrifice. In response to an inquiry from Joseph A. Lonergan, Scolnick sent a letter dated March 26 briefly describing the property, giving directions, stating his rock-bottom price was $2,500 cash, and noting that it was a form letter. On April 7, Lonergan wrote asking for the legal description, whether the land was level or included jutting rock hills, and suggesting a bank as escrow agent should he desire to purchase.

On April 8, Scolnick replied that Lonergan had found the property, that the bank was acceptable as escrow agent, that the land was fairly level, and gave the legal description, adding, "If you are really interested, you will have to decide fast, as I expect to have a buyer in the next week or so." On April 12, Scolnick sold the property to a third party for $2,500. Lonergan received the April 8 letter on April 14 and wrote on April 15 that he would open escrow and deposit $2,500 in conformity with Scolnick's offer. On April 17, he opened escrow with a $100 deposit and was ready and willing to deposit the remaining $2,400.

Lonergan sued Scolnick for specific performance or, alternatively, damages if specific performance was impossible. Scolnick answered denying that any contract existed. By stipulation, the trial court first tried the issue of whether a contract was formed, reserving other issues, and the matter was submitted on an agreed statement of facts, including the correspondence, without other evidence. The trial court filed a memorandum opinion stating that the April 8 letter was an offer conditioned on prompt acceptance and that Lonergan's delay of more than a week was not prompt. It then entered findings of fact and conclusions of law that no contract existed, and entered judgment for Scolnick. Lonergan appealed to the California Court of Appeal, Fourth District.

(Barnard, P. J.)

No. Scolnick's letters did not constitute a definite offer, so no contract was formed. A contract requires a meeting of the minds on a specific thing, usually shown by an offer and an acceptance. Under Restatement of Contracts section 25, no offer exists where the person addressed knows or has reason to know that the speaker does not intend the communication as an expression of fixed purpose until he has given a further expression of assent.

The correspondence shows Scolnick was ascertaining whether Lonergan was interested, not making a definite offer. As in Niles v. Hancock, 140 Cal. 157, 73 P. 840, where the correspondence was purely preliminary negotiations, the communications here were preliminary. The newspaper advertisement was merely a request for offers. The March 26 letter was expressly a form letter that supplied particulars clarifying the advertisement and directions to the property.

The April 8 letter added no definite offer. It answered Lonergan's questions and said that if he was really interested he would have to decide fast because Scolnick expected a buyer within a week or so. That statement shows Scolnick intended to sell to the first comer and reserved the right to do so. Lonergan knew or should have known he was not being given a reasonable time to accept a pending offer and that some further assent from Scolnick was required.

Because no offer was made, Lonergan's April 15 letter and opening of escrow could not operate as an acceptance. The trial court's construction of the letters was reasonable, and the most reasonable one, even if another construction were possible. The judgment is affirmed.