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Generally, in order for an acceptance to be effective, it must comply with the terms of the offer and be clear, unambiguous and unequivocal. When an offeree communicates an acceptance that is ambiguous or equivocal—that is, an acceptance that a reasonable person could view as assent, rejection, or an invitation to bargain further it is the offeror's reaction to that ambiguous acceptance that controls whether the parties have entered into a contract. In short, how the offeror treats the offeree's language will, assuming that treating the language either as language of acceptance or treating it as language requiring further discussion is reasonable, determine the language's effect. So long as the offeror's interpretation of the offeree's equivocal acceptance is plausible or reasonable, New York courts will find a contract has been formed. In other words, where an offeree communicates an ambiguous acceptance, the offeree must assume the risk of the offeror's misinterpretation.
Plaintiff Richard C. Davis conceived of the idea of a reality television show. On June 3, 2004, he spoke on the phone with the director of lifestyle programming of Defendant A&E Television Networks. Plaintiff proposed that he would assume all of the financial risk relating to the purchase and resale of the real estate but that they would otherwise equally split the net revenues of the television show. The plaintiff then claimed to have confirmed the terms of the contract with three other defendant network representatives during a later conference call. The defendant network produced four seasons of the show, only the first of which the plaintiff worked on as the parties’ relationship deteriorated over a dispute on the plaintiff’s compensation at the end of the first season. Plaintiff sued defendant in state court for breach of that oral contract in 2006, demanding approximately $7.5 million in damages, i.e., half of the net revenues from the three seasons that had completed filming prior to trial. Defendant successfully removed the case to federal court on the basis of diversity jurisdiction. After five days of trial in South Carolina federal district court, a jury returned a verdict awarding Plaintiff a little over $4 million, essentially half of the first season's net revenues. The district court subsequently denied Defendant's motions for judgment as a matter of law and a new trial pursuant to Fed. R. Civ. P. 50(b) and Fed. R. Civ. P. 59, respectively. On appeal, defendant argued that the evidence was legally insufficient to support a finding of an oral contract under New York law. Alternatively, the defendant argued that a new trial was warranted because of claimed errors in jury instructions and evidentiary rulings.
Did the district court err in denying defendant’s motions for judgment as a matter of law and a new trial pursuant to Fed. R. Civ. P. 50(b) and Fed. R. Civ. P. 59, respectively?
The court affirmed the district court’s denial of defendant’s motion for judgment as a matter of law and a new trial. The court held that a reasonable jury could conclude a reasonable person in the plaintiff's position after such extensive bargaining could have plausibly interpreted the director's "Okay, okay I get it," in conjunction with a statement that the only condition was network board approval, as acceptance. Sufficient evidence existed from which a reasonable jury could find that the parties reached an agreement with sufficiently clear definitions of expenses, revenue, and net profits and agreed upon duration and termination.