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Supreme Court of North Carolina • 1985

Normile v. Miller

326 S.E.2d 11 | 313 N.C. 98 | 1985 N.C. LEXIS 1521

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Takeaway

In short, a materially altered response is a new, revocable counteroffer—not an option—and an attempted acceptance after effective revocation cannot form a contract.

Background

Hazel Miller listed her Charlotte property for sale. Plaintiffs Michael Normile and Wawie Kurniawan submitted a signed written offer stating that it had to be accepted by 5:00 p.m. on August 5, 1980. Miller signed the form but made material changes to the earnest-money amount, down payment, mortgage balance, loan term, and buyer-qualification conditions. Those changes constituted her counteroffer.

When the broker presented Miller's counteroffer that evening, Normile did not accept it. Believing he had an option and that the property was effectively off the market until 5:00 p.m. the next day, he said he would wait before deciding. Shortly afterward, another buyer, Segal, made an offer on terms similar to Miller's counteroffer, and Miller accepted it. At about 2:00 p.m. on August 5, the broker told Normile, "you snooze, you lose; the property has been sold." Normile and Kurniawan then initialed Miller's counteroffer and tendered the required $500 earnest-money deposit before 5:00 p.m.

Both sets of prospective buyers sought specific performance. The trial court granted Segal summary judgment and ordered Miller to convey the property to him; it denied Normile and Kurniawan's summary-judgment motion. The Court of Appeals unanimously affirmed. The Supreme Court of North Carolina modified and affirmed that result.

Issues

Issue #1

Whether the acceptance deadline in the buyers' original offer became a term of Miller's counteroffer, making the counteroffer an irrevocable option until 5:00 p.m. on August 5.

Holding

No. Miller's materially altered response was a counteroffer, not an acceptance incorporating every unaltered term of the buyers' original offer, and it did not promise to remain open for any fixed period.

Reasoning

A contract requires mutual assent to the same bargain. A seller who accepts an offer only after materially changing its payment or other terms has not accepted the original offer; the qualified response rejects that offer and proposes a new bargain. Miller's changes to the deposit, down payment, mortgage amount, loan term, and buyer qualification were material, so her signed response was a counteroffer.

The original offer's 5:00 p.m. deadline limited Miller's power to accept the buyers' offer. It did not automatically limit the duration of the distinct counteroffer that Miller made after rejecting that offer. Miller's counteroffer manifested no intent to accept the original offer, including its deadline, unless the buyers agreed to her substituted terms.

An option requires, among other things, a promise by the property owner to give the other party an exclusive right to buy at a stated price within a specified time. Miller made no express promise to hold her counteroffer open, nor did she agree to convey the property if the buyers accepted by a particular deadline. Because that essential promise was absent, the Court did not need to decide whether her signature under seal supplied consideration sufficient to support an option.

Issue #2

Whether Normile and Kurniawan could accept Miller's counteroffer after receiving notice that she had sold the property to Segal.

Holding

No. Miller effectively revoked her unaccepted counteroffer before Normile and Kurniawan attempted to accept it, so they no longer had the power to create a contract by accepting.

Reasoning

Normile and Kurniawan neither expressly accepted Miller's counteroffer nor acted in a way that showed acceptance when it was first presented. Normile instead expressed disagreement with aspects of the proposal and said he would wait before deciding. His mistaken belief that he held an option did not establish mutual assent or create a contract.

Miller's accepted agreement with Segal was a definite act inconsistent with an intention to contract with Normile and Kurniawan. An ordinary offer is freely revocable before acceptance, and revocation is effective when the offeree receives reliable information that the offeror has taken such inconsistent action.

The broker's statement at 2:00 p.m. that the property had been sold gave Normile actual notice of revocation. Thus, when Normile and Kurniawan later initialed the counteroffer and delivered the $500 deposit, the counteroffer was already terminated. Their act could amount only to a new offer, which Miller never accepted because she was already bound by her contract with Segal.