PAUL EHLEN v. JOHN M. AND LYNNDEE MELVIN SUPREME COURT OF NORTH DAKOTA 823 N.W.2D 780; 2012 N.D….

PAUL EHLEN v. JOHN M. AND LYNNDEE MELVIN SUPREME COURT OF NORTH DAKOTA 823 N.W.2D 780; 2012 N.D. LEXIS 252 (2012) On February 16, 2011, Ehlen sent the Melvins a document entitled Purchase Agreement, offering the Melvins $850,000 for their property. The agreement provided the closing of the sale of the property would occur on or before March 1, 2011, and the total amount for the purchase would be paid on or before the closing date. Ehlen also attached a one-page document entitled Amendment to Purchase Agreement, which itemized a list of additional terms. Ehlen had signed the documents.
PAUL EHLEN v. JOHN M. AND LYNNDEE MELVIN SUPREME COURT OF NORTH DAKOTA 823 N.W.2D 780; 2012 N.D. LEXIS 252 (2012) On February 16, 2011, Ehlen sent the Melvins a document entitled Purchase Agreement, offering the Melvins $850,000 for their property. The agreement provided the closing of the sale of the property would occur on or before March 1, 2011, and the total amount for the purchase would be paid on or before the closing date. Ehlen also attached a one-page document entitled Amendment to Purchase Agreement, which itemized a list of additional terms. Ehlen had signed the documents. On February 18, 2011, the Melvins reviewed Ehlens offer with their attorney and modified some of the terms on the agreement, including the spelling of John Melvins name and the legal description of the property. They also added multiple terms to the purchase agreement and the amendment, including that the property was being sold as is, that the mineral rights conveyed by them were limited to only those rights they owned, and that the land was subject to a federal wetland easement and an agricultural lease. The parties had not previously negotiated the added terms. The Melvins hand-wrote all of the changes on the documents they received from Ehlen and they initialed each change. The Melvins signed the documents and sent them back to Ehlen. Ehlen did not contact the Melvins after they sent the documents back to him. The Melvins contacted the title company on March 1, 2011, and learned Ehlen had not paid the money for the property or initialed the amendments the Melvins made. The Melvins attorney sent Ehlen a letter dated March 2, 2011, to confirm that the transaction started and contemplated between [Ehlen] and [the Melvins] is hereby terminated. Ehlen sued the Melvins to enforce the Purchase Agreement, alleging it was a binding and enforceable contract. After a trial, the district court ruled there was no contract, because the purchase agreement and the amendment to the purchase agreement constituted an offer to purchase property from the Melvins, and the Melvins made a counteroffer in writing that Ehlen failed to accept. The court dismissed the case and Ehlen appealed. JUSTICE KAPSNER_Ehlen argues the district court misapplied the law by mischaracterizing the changes the Melvins made to the purchase agreement as a counteroffer requiring a separate acceptance from Ehlen. Ehlen contends the agreement is a valid and binding contract and the Melvins breached the agreement. Ehlen claims he accepted any counteroffer that was made. . . . The acceptance of a contract must comply with the terms of the offer. . . . The acceptance of a contract must be absolute and unqualified, and a qualified acceptance is a counter proposal. . . . . . . Here, the Purchase Agreement and Amendment to the Purchase Agreement the Melvins received was an offer from Ehlen to purchase the property. Although the Melvins signed the agreement, the district court found the Melvins made substantive changes and additions to the agreement and the parties did not agree upon the essential terms. The evidence supports the courts finding. There was evidence the purchase price was the only term in the agreement the Melvins had approved before they received Ehlens offer. The Melvins added various terms, including that the property was sold as is, the mineral rights were limited, the property was subject to a federal wetlands easement and an agricultural lease, and the Melvins wanted to remove some equipment from the property. The Melvins made substantive changes to the agreement before signing it and their acceptance was not unqualified. To form a contract, the offer and acceptance must express assent to the same thing. . . . A conditional acceptance is itself a counter offer and rejects the original offer. We conclude the evidence supports the courts finding that the parties did not agree to the essential terms of the agreement and the Melvins modifications to the agreement constituted a counteroffer. Ehlen contends the Melvins accepted the agreement and it is a binding contract because the agreement stated, THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYERS AND SELLERS. However, the Melvins made material changes and added new terms to the agreement and the parties did not sign the same agreement. The parties must agree on the same thing in the same sense, and the use of the words that a document is a legally binding contract does not mean that a contract exists. Ehlen also argues he accepted any counteroffer the Melvins made. The district court found Ehlen never accepted the Melvins counteroffer, and the evidence supports the courts finding. It is a general rule of law that silence and inaction, or mere silence or failure to reject an offer when it is made, do not constitute an acceptance of the offer. . . . Ehlen did not sign the modified agreement or initial the changes. There was no evidence he complied with the terms of the agreement. There also was evidence the deal was off because Ehlen was concerned about terms of his offer that were modified by the Melvins. The evidence supports the courts finding that Ehlen did not accept the Melvins counteroffer. CRITICAL THINKING Can you change the facts of the case in a way that might have led the court to a different decision? ETHICAL DECISION MAKING What values are furthered by this decision? What values are sacrificed by this decision?