What legal issues are addressed in this case?

The case addresses whether a time limit in a purchaser's offer becomes a term of the seller's counteroffer, turning it into an irrevocable option when signed under seal. It also addresses whether a purchaser who neither accepted nor rejected a counteroffer could accept it after the seller revoked it by selling to another buyer, and the effect of the purchaser's attempted late acceptance.

What rule did the court rely on in this case?

A conditional acceptance that alters the offer's terms is a counteroffer and a rejection of the original offer (Richardson v. Greensboro Warehouse & Storage Co.), and a contract requires mutual assent to the same terms (Goeckel v. Stokely). An option requires the owner's promise to hold the offer open for a stated time, and an offer is revocable before acceptance, with revocation effective once the offeree receives reliable notice of the offeror's inconsistent action.

Would the case have come out differently if certain facts were changed?

Yes, the outcome would likely differ in several respects. If Miller had signed the form without changing any terms, her acceptance of the original offer would have formed a binding contract. If Normile had accepted the counteroffer before Miller contracted with Segal or before learning of the sale, a contract would have formed. If the counteroffer had contained an express promise to hold the offer open until 5:00 p.m. on 5 August, and consideration supported that promise, an option would have existed under the court's reasoning. The court did not decide whether a seal alone supplies that consideration.

Normile v. Miller

Supreme Court of North Carolina - 313 N.C. 98 (1985)

Main Takeaway

A seller's response that changes the terms of a buyer's offer rejects that offer and creates a counteroffer that does not inherit the buyer's deadline, so it remains freely revocable. Once the seller contracts with another buyer and the original buyer learns of it, the original buyer can no longer accept.

Issues

Does a prospective purchaser's time-for-acceptance provision in an original offer to purchase real property become part of the seller's subsequent counteroffer, and may the purchaser accept the counteroffer after the seller has revoked it by contracting with another buyer?

Facts

Hazel Miller owned real estate in Charlotte, North Carolina, listed with realtor Gladys Hawkins. On 4 August 1980, broker Richard Byer showed the property to Michael Normile and Wawie Kurniawan, who signed a written offer to purchase on a form stating that time was of the essence and that the offer must be accepted on or before 5:00 p.m. on 5 August 1980. Miller signed the form under seal but changed several terms: she raised the earnest money deposit from $100 to $500, raised the down payment from $875 to $1,000, lowered the unpaid mortgage principal from $18,525 to $18,000, shortened the seller-loan term from 25 to 20 years, and added a purchaser qualification contingency. Byer presented this counteroffer to Normile that evening. Normile did not have $500 and wanted lower payments, and he believed he held an option on the property. He neither accepted nor rejected the counteroffer. At about 12:30 a.m. on 5 August, Lawrence Segal signed an offer with terms nearly identical to the counteroffer, and Miller accepted it without change. At about 2:00 p.m., Byer told Normile the property had been sold. Before 5:00 p.m., Normile and Kurniawan initialed the counteroffer and delivered it with a $500 deposit to the broker's office.

Procedural History

Normile and Kurniawan, and separately Segal, sued Miller for specific performance, and the trial court consolidated the trials on Segal's motion. Miller acknowledged her contract with Segal but asserted she could not convey title to him because of the other action. Both sets of plaintiffs moved for summary judgment. The trial court granted Segal's motion, ordered Miller to specifically perform the contract with Segal, and denied the motion of Normile and Kurniawan. Normile and Kurniawan appealed to the North Carolina Court of Appeals, which unanimously affirmed. The North Carolina Supreme Court allowed discretionary review on their petition.

Holding and Rationale

(Frye, J.)

No. The time-for-acceptance provision in the purchasers' original offer did not carry into Miller's counteroffer, and the purchasers could not accept the counteroffer after it was revoked. The Court of Appeals' decision is modified and affirmed.

An offeror controls the offeree's power of acceptance and may fix the period within which the offer can be accepted. An offeree who purports to accept but changes the terms makes a qualified or conditional acceptance, which operates as a rejection of the original offer and a counteroffer. Richardson v. Greensboro Warehouse & Storage Co., 223 N.C. 344, 26 S.E.2d 897 (1943). A contract requires assent to the same thing in the same sense, so changed terms mean no meeting of the minds. Goeckel v. Stokely, 236 N.C. 604, 73 S.E.2d 618 (1952). Miller's changes to the deposit, down payment, mortgage balance, and loan term were material, so her response rejected the original offer and extinguished it. Her conditional acceptance did not manifest assent to the original offer's terms, including the 5:00 p.m. deadline, so that deadline never became a term of the counteroffer.

The counteroffer also was not an option contract. An option requires the owner's promise to hold an offer open for a specified time, and nothing in Miller's counteroffer contained such a promise. Unlike the written promises in Ward v. Albertson, Thomason v. Bescher, and Kidd v. Early, the form's only deadline language bound the purchasers' offer. Because no promise to hold the offer open existed, the Court need not decide whether the seal supplied consideration.

The counteroffer required the purchasers to accept or reject it, expressly or by conduct. Benya v. Stevens & Thompson Paper Co., 143 Vt. 521, 468 A.2d 929 (1983). Normile did neither; he waited, mistakenly believing he held an option, so no contract formed. An offer is freely revocable before acceptance, and notice of revocation is effective when the offeree receives reliable information that the offeror acted inconsistently with an intent to contract. Miller's contract with Segal revoked the counteroffer, and Byer's "you snooze, you lose" remark gave the purchasers notice. Their later initialing and delivery of the form was only a new offer, which Miller could not accept because she had already contracted with Segal.