Cea v. Hoffman - 2012 UT App 101, 276 P.3d 1178

Rule:

Formation of a contract requires an offer, an acceptance, and consideration. An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it. For an offer to be one that would create a valid and binding contract, its terms must be definite and unambiguous. The obligations of the parties must be set forth with sufficient definiteness that the contract can be performed.

Facts:

In June 2006, the Ceas entered into a purchase agreement with American TimberCraft, LLC (ATC), a Utah limited liability company. Pursuant to that agreement, the Ceas made a down payment of $172,116 to ATC. In November 2006, ATC signed an agreement with Modular in which Modular acquired from ATC its work in progress and pending orders along with all related deposits and down payments, including the Ceas' $172,116. Six months later, Modular sent the Ceas a letter (the Modular Letter) explaining that ATC had "ceased operations," "liquidated all company assets," and was "no longer capable of completing or performing on its contract with the Ceas. However, Modular proposed two options to the Ceas: (i) Modular was to complete the Ceas’ log home; or (ii) Modular was to refund the Ceas’ deposit. In the First Cea Letter, the Ceas stated that they would accept Modular’s proposal to build and deliver the home. Modular did not respond to the First Cea Letter. Subsequently, the Ceas sent a second letter (the Second Cea Letter) purporting to accept Modular's proposal to refund their deposit. Modular did not respond to the Second Cea Letter, nor did it refund the Ceas' deposit. Consequently, the Ceas instituted the present suit against the appellees, alleging (1) breach of contract for failure to build and deliver their home or, alternatively, for failing to refund the Ceas' deposit; (2) fraud or intentional misrepresentation; and (3) negligent or reckless misrepresentation. Appellees successfully moved for summary judgment. The trial court ruled that Modular and the Ceas never formed a binding contract and that Modular made no fraudulent or negligent misrepresentations. The present appeal followed. 

Issue:

Did the trial court correctly rule that Modular and the Ceas never formed a binding contract? 

Answer:

No.

Conclusion:

The court held that the trial court erred in ruling no contract was formed between plaintiffs and defendant with respect to the return of the deposit. The modular letter stated that plaintiffs could receive their deposit back instead of continuing with the construction of the home. Plaintiffs' first letter included a counteroffer to the proposal to complete construction, which was not accepted. Because plaintiffs' second letter effectively withdrew the counteroffer, it operated as an acceptance of the offer to refund the deposit.