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Panhandle E. Pipe Line Co. v. Smith - 637 P.2d 1020 (Wyo. 1981)

Rule:

An offeror has the right to demand an exclusive mode of acceptance from an offeree. The mode of acceptance can be unreasonable or difficult if the offeror clearly expresses his intention to exclude all other modes of acceptance. The intention must be expressed in the communicated offer itself. 

Facts:

Panhandle Eastern Pipe Line Company (Panhandle) fired Mr. Smith in October, 1979. Mr. Smith followed the grievance procedure provided by a collective bargaining agreement to the third and final level of intracompany proceedings, which was a meeting with company officials at the division office. After that meeting, Panhandle initially decided to uphold the decision to fire Mr. Smith, but changed its mind after Mr. Smith's union representative requested that it reconsider. By letter dated December 13, 1979, the company offered to withdraw the discharge if Mr. Smith would agree to comply with certain terms and conditions. Mr. Smith signed the letter under the typewritten words, "Understood, Agreed To and Accepted," added some handwritten notations, and again signed his name. The union representative also signed the letter and returned it to the company. Because Mr. Smith wrote on the letter, Panhandle argued that no contract existed, claiming that Mr. Smith failed to use the mode of acceptance which it prescribed. As Panhandle conceded at oral argument, it would have contested any words being added to the letter, even ones as innocuous as, "Have a nice day." Panhandle also argued that Mr. Smith made a counteroffer by adding terms and conditions which showed he was trying to modify the offer. The district court found that Panhandle breached the contract and awarded damages to Mr. Smith. Panhandle challenged the judgment.

Issue:

Did Panhandle clearly express in the communicated offer its intention to exclude all other modes of acceptance?

Answer:

No.

Conclusion:

The court affirmed and held that a contract existed and had been breached. Because Panhandle failed to clearly express in the communicated offer its intention to exclude all other modes of acceptance, the court found that Panhandle did not orally modify its offer during its telephone conversation with Mr. Smith. Thus, the court ruled that Mr. Smith’s handwritten additions to the letter did not modify the offer and was not a counteroffer. The court determined that neither party agreed to submit to arbitration and that Panhandle waived any right it had to arbitration. The court found that the damage award was supported by sufficient evidence. In reviewing the damages, the court stated that the fact that some of the lost benefits of Mr. Smith’s job were intangible did not mean that he could not recover for their loss because they were injuries caused by Panhandle’s breach of contract.

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