ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, September 8, 2017

Conversations left open-ended don't rise to the level of an offer

In my head it's still the beginning of the school year, even though at my school we just finished our third week of classes already. This means that, because we only have a one-semester Contracts course, I'm just finishing up contract formation and moving on, and this case is kind of a nice little reminder review about the principles surrounding offers.

The case out of New Jersey, Kristine Deer, Inc. v. Booth, No. C-29-16 (behind paywall), involved a luxury active wear company, K-DEER, for which the defendant, Booth, worked. Booth had several conversations over the course of her employment with K-DEER's sole shareholder, Kristine Deer, about Booth receiving possible equity interest in the company. However, every one of those conversations was fairly vague. Deer seemed to always finish the conversations with some kind of demurral: that she had to "think about" it more, or that she wasn't "ready to have the conversation." Eventually, Booth resigned with an e-mail that read "If you are not willing to pursue an active dialog about ownership I am not interested in working at K-DEER." 

The parties are now involved in litigation, which included, among other things, Booth's counterclaim for breach of contract. She alleged that "Deer led [her] to believe she was a partner and had a right to equity in K-DEER," because she "did not explicitly deny her requests for equity" and called her a "partner" at times. However, the court quoted at length from Booth's deposition, where she admitted that Deer did not offer her any equity and that, in fact, her unwillingness to do so was why she resigned. Under these circumstances, it was impossible to find an offer from Deer to Booth. There was no expression of commitment on Deer's part. In fact, all of Deer's statements seemed to evince the opposite. So the court found no contract existed between the parties. 

As I am teaching my students to do now, the court then moved on, examining Booth's claim for quantum meruit. However, Booth never alleged that she wasn't adequately compensated, just that she would have left K-DEER earlier had she realized Deer wasn't going to give her equity. That did not justify quantum meruit. The court found that Booth had been compensated for all the work she had performed, so there was no unjust enrichment on K-DEER's part.

http://lawprofessors.typepad.com/contractsprof_blog/2017/09/conversations-left-open-ended-dont-rise-to-the-level-of-an-offer.html

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Comments

If you are willing to look at an English case I have a good one for you on a similar issue. University of Plymouth v European Language Center (ELC) (I don't have the cite but it's easy to find on the internet), in which ELC, a language school that conducted summer abroad programs wanted to rent dorm rooms at the University of Plymouth as it had done for years. At the end of one summer the University wrote to ELC that "we are advising you that next year we will have only 150 rooms to sell" or something along those lines. The parties continued to negotiate throughout the year but then never actually signed a contract. However, without actually signing a contract for the next year, ELC tried to construe that language as an offer and "accept" the 150 rooms, then sued when the university refused to provide them. The court, in a nice discussion of offer and acceptance by words and how negotiations could sometimes lead to a kind of rolling acceptance by conduct, ruled that here there was in fact no offer, and thus no acceptance and no contract concluded. Marian

Posted by: Marian Dent | Sep 9, 2017 1:33:00 AM

Oh, thanks, I'll look into that case!

Posted by: Stacey | Sep 14, 2017 1:27:57 PM

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