Pakideh v. Franklin Commercial Mortgage Group, Inc.
213 Mich. App. 636 · Michigan Court of Appeals · 1995
Facts
In August 1987, plaintiff sought a commercial loan from defendant to finance the purchase of an apartment complex. Defendant issued a commitment letter on December 2, 1987, offering a $3 million loan and requiring a $52,500 commitment fee. The letter explicitly stated that acceptance required plaintiff to sign, date, initial, and return the letter by December 16, 1987, along with the fee. Plaintiff never signed or returned the letter, but paid the $52,500 on December 30, 1987. Loan negotiations stalled, and in November 1988, plaintiff demanded the return of the money, which defendant refused, claiming it was a non-refundable fee. Plaintiff subsequently obtained a loan from another company.
Procedural history
Plaintiff appealed as of right from a jury verdict of no cause of action in a conversion action. The trial court had denied plaintiff’s motions for a directed verdict and judgment notwithstanding the verdict. This appellate court reversed the jury verdict and the trial court's denial of plaintiff's motions, as well as the order awarding costs and attorney fees to the defendant.
Issue
Was a valid contract formed between the plaintiff and defendant when the plaintiff paid the commitment fee but failed to sign and return the commitment letter by the specified deadline?
Holding
No valid contract was formed because the plaintiff did not timely accept the defendant's offer in the specific manner required by the commitment letter. The court reversed the jury verdict and the denial of plaintiff's motions for a directed verdict and judgment notwithstanding the verdict.
Rule
For a contract to be formed, there must be an offer and an acceptance that is unambiguous and in strict conformance with the offer's terms. If an offer specifies a particular method and deadline for acceptance, that method is exclusive, and failure to comply means no contract is formed. An offer expires at the end of the stated acceptance period, and an offeree cannot accept an offer, either by words or deeds, after it has lapsed. An offeror cannot unilaterally waive the lapse of an offer.
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