There is no offer properly capable of acceptance where the purported offeree knows or has reason to know that the person making the purported offer does not intend to conclude a bargain until he has made a further manifestation of assent. Indeed, if the addressee of a proposal has reason to know that no offer is intended, there is no offer even though he understands it to be an offer. Reason to know depends not only on the words or other conduct, but also on the circumstances, including previous communications of the parties and the usages of their community or line of business. Thus, it has been held that a letter proposing to supply certain goods but recognizing that further negotiations between the parties were necessary did not constitute an offer capable of acceptance. Instead, it constituted preliminary negotiations soliciting an offer from the opposing party.
The consumers prevailed in a products liability suit against the tire company and were awarded prejudgment interest. A discrepancy arose when counsel for the respective parties tried to calculate the total judgment amount. Defense counsel sent an e-mail message setting forth his calculation and asked plaintiffs' counsel to contact him to discuss it. Noting an error in the calculation that resulted an overstatement of damages by more than $550,000, plaintiffs' counsel deemed the e-mail to be a settlement offer, accepted it, and thereafter filed a motion to enforce.
Are erroneous documents sent by a defendant's counsel considered as a settlement offer?
The court held that no settlement agreement existed; the parties were not negotiating dollar amounts but were exchanging mathematical calculations attempting to identify a discrepancy in their respective calculations, and the e-mail did not solicit an acceptance but solicited a telephone call and discussion. Even if a settlement agreement had been reached, however, it was unenforceable because the consumers were attempting to exploit a mistake to gain a windfall. The consumers were entitled to the damages awarded by the jury and no more.