While it is true that Minn. Stat. § 336.2-204 does not require a signed agreement prior to formation of a contract, where the parties know that the execution of a written contract was a condition precedent to their being bound, there can be no binding contract until the written agreement was executed.
Plaintiff contacted defendant, a foreign corporation, regarding an offer to sell defendant certain computer equipment. The parties entered into negotiations, but the agreement was stalled because defendant objected to three clauses in the proposed contract. Plaintiff contacted defendant by telephone and offered to strike two of the three clauses; defendant declined. Sometime later, plaintiff offered to strike the third clause. Defendant informed plaintiff that the deal was "dead". Plaintiff sold the equipment for a lower price and filed suit against defendant for the difference between the contract price and the sale price. The trial court found that it had jurisdiction over defendant under Minn. Stat. § 543.19, subd.1(b) (1984), and also concluded that parties had a valid contractual agreement, which defendant breached. On appeal, the court affirmed jurisdiction, but reversed the trial court's judgment that a valid contract had been formed between the parties.
Did the trial court err in finding that the parties entered into a contract?
The court found that while the trial court did have jurisdiction over defendant, there was no valid contract. The court found that plaintiff made a counteroffer to defendant by striking two of the three clauses, which defendant rejected; plaintiff then made a new offer by offering to strike the third clause, which was rejected immediately by phone.