Thank You For Submiting Feedback!
Objective manifestation of mutual assent to all material terms of an agreement is an essential element to the valid formation of a legally enforceable contract
Jon Markman, president of Markman Capital Insight LLC (MCI) and Tray Thomas d/b/a Cambridge Decision Science (CDS) began settlement negotiations following the termination of their business relationship. Thomas transmitted to Marksman a proposed settlement agreement dated October 15, 2015 together with a proposed mutual release of the same date. Among the terms of the proposal was paragraph 3 of the proposed settlement agreement regarding certain customer lists. Markman struck a portion of that paragraph 3 and initialed his correction. He then returned the modified document containing his rejection of the terms of paragraph 3 together with an explanatory e-mail containing a counteroffer: the stricken language would remain out of the settlement. Thomas and Markman exchanged further e-mails over the course of the next few days. These exchanges included Thomas making several counteroffers regarding the customer list described in paragraph 3 of the proposed settlement agreement. There was also a proposal for arbitration of disputes that both sides never simultaneously agreed to. Thereafter, CDS commenced the present action for damages, alleging that the parties entered into a binding settlement agreement, which Markman and his related company had breached. CDS moved to enforce the settlement agreement, which the trial court granted. Markman and MCI appealed, arguing that the settlement agreement dated October 15, 2015 was not an enforceable contract.
Was the settlement agreement dated October 15, 2015 an enforceable contract?
The court noted that the parties' objective manifestation of mutual assent to all of an agreement's material terms was an essential element to the valid formation of a contract. Generally, manifestations of mutual assent were expressed by an offer and an acceptance of that offer. In this case, the court held that there was no objective manifestation of mutual assent since Markman’s actions constituted a rejection of the Thomas offer embodied in the proposed settlement agreement. According to the court, Markman initialed the change and returned the proposed document with his counteroffer to Thomas; however, the string of emails that followed had shown that Thomas never agreed to the counteroffer. In fact, Thomas made several counteroffers of his own. Markman did not accept them. There never was any objective manifestation of mutual assent to the material term regarding customer lists. Thus, there never was a contract.