Law School Case Brief
Panagotacos v. Bank of Am. - 60 Cal. App. 4th 851, 70 Cal. Rptr. 2d 595 (1998)
Terms proposed in an offer must be met exactly, precisely, and unequivocally for its acceptance to result in the formation of a binding contract and a qualified acceptance amounts to a new proposal or counteroffer putting an end to the original offer.
James and Diane Panagotacos wanted to buy Geselschap’s house in Greece. The Geselschaps wrote back and proposed to sell their house for $160,000 but payment must be made in Germany not later than April 15, 1994. The Panagotacoses replied indicating their agreement to purchase the property, but with a statement that payment be made in Greece. The Geselschaps replied stating that the payment in Germany was essential; hence, they failed to agree. On April 13, 1994, the Panagotacoses agreed to pay in Germany or Amsterdam and requested for an extension until June. The Geselschaps refused because there was no indication as to how the Panagotacoses will comply with the payment condition.
The Panagotacoses intended to secure a loan from First Interstate Bank to fund the purchase. The collateral was a property in Corte Madera that had also been used by the Panagotacoses in a previous loan with Bank of America (BOA) in 1974. The loan had been paid, but BOA was able to record the reconveyance only on April 12, 1994. On the same day, First Interstate Bank prepared the loan documents, but the Panagotacoses only signed it seven days later on April 19. The Greek property was sold to another buyer shortly after April 15, 1994.
The Panagotacoses sued BOA, arguing that the delayed reconveyance was the cause of their inability to complete their loan in time to purchase the Greek property. BOA moved for summary judgment, arguing that the Panagotacoses did not suffer damages because there was no binding contract to purchase the Greek property. The trial court entered judgment in favor of BOA, and the Panagotacoses sought appellate review.
Did the Panagotacoses have a binding contract to purchase the Greek property?
The Court ruled that there was no binding contract because the Geselschaps did not signify their concurrence to the counteroffers of the Panagotacoses. First, the Geselschaps disagreed as to the proposed change in the place of payment. Second, although the Panagotacoses eventually agreed to pay in Germany, they still bargained for the extension of payment to June. Third, there was no agreement as to how the money will be transferred. According to the Court, no binding contract arose because the Panagotacoses failed to timely accept the Geselschaps’ offer – a cause not attributable to BOA. The Court also ruled that the Panagotacoses were not entitled to emotional distress damages since any distress they suffered was purely caused by their own failure to accept Geselschaps’ condition of payment. The Court affirmed the trial court’s decision.
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