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CASE 10-3
OSPREY L.L.C. v. KELLY-MOORE PAINT CO., INC.
Supreme Court of Oklahoma, 1999
1999 OK 50, 984 P.2d 194
http://scholar.google.com/scholar_case?case=15066374301719252497&q=984+P.2d+194&hl=en&as_sdt=2,34
Kauger, J.
[In 1977, the defendant, Kelly-Moore Paint Company, entered into a
fifteen-year commercial lease with the plaintiff, Osprey, for a property in
Edmond, Oklahoma. The lease contained two five-year renewal options.
The lease required that the lessee give notice of its intent to renew at
least six months prior to its expiration. It also provided that the renewal
“may be delivered either personally or by depositing the same in United
States mail, first class postage prepaid, registered or certified mail, return
receipt requested.” Upon expiration of the original fifteen-year lease,
Kelly-Moore timely informed the lessor by certified letter of its intent to
extend the lease an additional five years. The first five-year extension
was due to expire on August 31, 1997. On the last day of the six-month
notification deadline, Kelly-Moore faxed a letter of renewal notice to
The precise issue of whether a faxed or facsimile delivery of a written
notice to renew a commercial lease is suffcient to exercise timely the
renewal option of the lease is one of first impression in Oklahoma.
Neither party has cited to a case from another jurisdiction which has
decided this question, or to any case which has specifically defined
“personal delivery” as including facsimile delivery.
* * *
Osprey argues that: (1) the lease specifically prescribed limited means
of acceptance of the option, and it required that the notice of renewal be
delivered either personally or sent by United States mail, registered or
certified; (2) Kelly-Moore failed to follow the contractual requirements of
the lease when it delivered its notice by fax; and (3) because the terms
A lease is a contract and in construing a lease, the usual rules for the
interpretation of contractual writings apply. * * *
Language in a contract is given its plain and ordinary meaning, unless
some technical term is used in a manner meant to convey a specific
technical concept. A contract term is ambiguous only if it can be
interpreted as having two different meanings. * * * The lease does not
appear to be ambiguous. “Shall” is ordinarily construed as mandatory
and “may” is ordinarily construed as permissive. The contract clearly
The purpose of providing notice by personal delivery or registered mail
is to insure the delivery of the notice, and to settle any dispute which
might arise between the parties concerning whether the notice was
received. A substituted method of notice which performs the same
function and serves the same purpose as an authorized method of notice
is not defective. Here, the contract provided that time was of the
essence. Although Osprey denies that it ever received the fax, the fax
*** Chapter Outcome ***
State the seven ways by which an offer may be terminated other than by acceptance.
B. DURATION OF OFFERS
An offer will stay open until it is either accepted or until one of the following
occurrences terminates it: 1) lapse of time; 2) revocation; 3) rejection; 4)
counteroffer; 5) death or incompetence of the offeror or offeree; 6)
destruction of the subject matter to which the offer relates; 7) subsequent
illegality of the type of contract proposed by the offer.
Lapse of Time
A contract offer will remain open for a reasonable time unless a specified
time is stated. Where an offer provides that it will be held open for a specific
period of time, the general rule is that the period begins to run on the day
the offeree receives it.
CASE 10-4
SHERROD v. KIDD
Court of Appeals of Washington, Division 3, 2007
155 P.3d 976
http://scholar.google.com/scholar_case?
q=155+P.3d+976&hl=en&as_sdt=2,34&case=7607426217314840344&scilh=0
Sweeney, C. J.
* * *
David and Elizabeth Kidd’s dog bit Mikaila Sherrod. Mikaila through her
guardian ad litem (GAL) made a claim for damages. On June 14, 2005,
the Kidds offered to settle the claim for $31,837. On July 12, Mikaila
through her GAL sued the Kidds. On July 20, the Kidds bumped their offer
to $32,843.
The suit was subject to mandatory arbitration. The parties proceeded
to arbitration on April 28, 2006. On May 5, the arbitrator awarded Mikaila
$25,069.47. On May 9, the GAL wrote to the Kidds and purported to
accept their last offer of $32,843, made the year before.
The Kidds contend that the trial court did not consider that implicit in
its settlement offer was the GAL’s forbearance in proceeding with the
arbitration to its conclusion. The GAL argues that the offer was not
conditioned upon the arbitration proceeding in any manner. And the offer
provided no time limit for its acceptance. The GAL further claims that the
An offer to form a contract is open only for a reasonable time, unless
the offer specifically states how long it is open for acceptance.
[Citations.] “[I]n the absence of an acceptance of an offer ... within a
reasonable time (where no time limit is specified), there is no contract.”
[Citation.]
How much time is reasonable is usually a question of fact. [Citation.]
But we can decide the limits of a reasonable time if the facts are
undisputed. [Citation.] And here the essential facts are not disputed.
A reasonable time “is the time that a reasonable person in the exact
position of the offeree would believe to be satisfactory to the offeror.”
[Citation.] “The purpose of the offeror, to be attained by the making and
performance of the contract, will affect the time allowed for acceptance,
Implicit in an offer (and an acceptance) to settle a personal injury suit
is the party’s intent to avoid a less favorable result at the hands of a jury,
a judge or, in this case, an arbitrator. The defendant runs the risk that the
award might be more than the offer. The plaintiff, of course, runs the risk
that the award might be less than the offer. Both want to avoid that risk.
And it is those risks that settlements avoid.
*** Chapter Outcome ***
Describe the five situations limiting an offeror’s right to revoke her offer.
Revocation
Is done by the offeror, generally at any time prior to its acceptance by the
offeree. EXCEPTIONS:
Option Contracts — by which the offeror is bound to hold open an offer for
a specified time.
Firm offer Under the Code — A merchant is bound to keep an offer to
buy or sell goods open for a stated period if he gives assurance in a signed
writing that it will be kept open.
Statutory Irrevocability — under which certain offers such as bids made
to a state and preincorporation stock subscription agreements are
irrevocable.
Rejection
An offeree may accept or reject an offer as he desires. The offeree does not
have to formally reject the offer, but may simply let the offer lapse without
taking action. Once the offeror receives the rejection, the offer terminates,
and the offeree cannot change his mind and accept.
Counteroffer
Death or Incompetency
The death or incompetency of either the offeror or the offeree terminates an
offer because a dead person or an incompetent person cannot legally accept
an offer or enter into a contract.
Destruction of Subject Matter
Destruction of the specific subject matter of an offer also terminates the
offer. For example, a car which has been totaled after an offer was made
cannot be sold under the original offer.
Subsequent Illegality
If the performance or subject matter of an offer becomes illegal after the
offer is made, but before it is accepted, the offer is terminated.
II. ACCEPTANCE OF OFFER
Acceptance of an offer is necessary to create a contract and marks the
moment the contract is formed.
A. COMMUNICATION OF ACCEPTANCE
Bilateral offers require that acceptance be communicated to the offeror. In
the case of unilateral offers, notice of acceptance to the offeror is usually not
required.
Silence as Acceptance
Usually an offeree’s silence will not constitute acceptance. The policy behind
this rule is to prevent the offeror from requiring a2rmative conduct on the
part of the offeree in order to decline an offer.
*** Chapter Outcome ***
Explain the various rules that determine when an acceptance takes effect.
Effective Moment
We have already seen that an offer, a revocation, a rejection, and a
counteroffer are all effective when they are received. An acceptance,
Stipulated Provisions In The O-er — Sometimes an offer may specify
what method of communication is to be used. The acceptance must be by
this method to be valid.
Authorized and Unauthorized Means — In the past, an authorized means
of communication was:
• whatever means of communication the offeror specified in the offer, or
• if no means was specified, the same means the offeror used when
making the offer.
Today, other means of communication are common — electronic mail, voice
mail, or private-delivery express mail. The Restatement and the Code now
provide a broader definition of authorized means: any reasonable means to
communicate, unless the offer stipulates otherwise.
Acceptance Following a Prior Rejection — An acceptance sent after a
rejection is sent is not effective unless the acceptance is received first by the
offeror.
NOTE: See Figure 10-1 for a summary of types of communication in ofiers.
Defective Acceptances
A late or defective acceptance does not create a contract.
NOTE: See Case 10-3, earlier in this chapter.
B. VARIANT ACCEPTANCES
An acceptance that contains terms different from or additional to those in
the offer is called a variant acceptance. Variant acceptances are treated
differently under common law than they are by the Code.
*** Chapter Outcome ***
Compare the traditional and modern theories of definiteness of acceptance of an offer
as shown by the common law “mirror image” rule and by the rule of the UCC.
Common Law
Under common law, an acceptance must be a mirror image of the offer. It
may not change, add to, subtract from, or qualify in any way the terms of the
offer. If any variations from the offer occur in the acceptance, a counteroffer
is created which does not form a contract.
Code
The mirror image rule of common law is modified by the Code, primarily
because of the realities of modern business practices, particularly the use of
