Bretz v. Portland General Electric Co.
Facts
Bretz wrote to Portland General Electric Co. (PGE, D) to express interest in purchasing Beartooth stock for $2 million. The letter outlines a detailed and elaborate procedure for acceptance and completion of the transaction. PGE returned a revised version of the letter and requested that Bretz submit it as an offer for consideration by PGE’s board of directors. PGE’s letter included a statement that the terms of its letter had not been discussed with company management and that they may request other or different terms.
Bretz replied and incorporated the suggestions in his next letter of August 10th. PGE replied on August 23rd with a counteroffer of $2.75 million. Bretz wrote another letter on August 29th, captioned it Acceptance of Offer, and wrote that his company accepts PGE’s counteroffer.
Believing that the parties had creating a binding contract, Bretz executed an agreement with a third party for the sale of coal from the Beartooth property. On September 7th, PGE notified Bretz that there was no contract for the purchase of the stock.
Bretz brought this lawsuit seeking $25 million in damages. PGE moved for summary judgment based on the statute of frauds. The magistrate agreed with PGE and held that parol evidence could not be used to remove the contract from the statute of frauds. Bretz appealed, contending that the August 23rd letter with prior conversations and correspondence was a counteroffer which PGE accepted.
Issue
- What is the rule for determining whether a party has made a firm offer?
- Does a finding of equitable estoppel require reasonable reliance?
Holding and Rule of Law
- Whether a party has made a firm offer turns on the facts and circumstances of each situation as well as on what the other party might reasonably have inferred the statements and behavior of the first party.
- Yes. Equitable estoppel requires reasonable reliance.
This contract is governed by the statute of frauds. While parol evidence may not be used to create the contract it may be used to explain ambiguities. Here, the specific issue is whether the defendant’s August 23rd letter could be reasonably be construed as an offer or whether it was merely an invitation to contract.
From the face of the letter it clearly states that the defendant remained receptive to an offer from the plaintiff. The letter also refers to another commitment that the defendant had for the sale of the stock implying that it would have to free itself from that obligation. The letter also proposes that the deal be closed in the manner specified in the plaintiff’s letter of August 10th. The letter from defendant then concludes with an invitation that plaintiff resubmit his offer on the above basis. Defendant did not have an intent to make an offer.
When the instrument itself negates the existence of a contract, it may not be relied upon to satisfy the statute of frauds. The district court was correct in granting summary judgment. There is also the issue of an oral contract. Plaintiff claims that a phone conversation conditioned formation of a contract on the receipt of his letter. Even if we accept this version of these oral events, the alleged oral contract was not formed until defendant received the August 29th letter, which in fact occurred several days after plaintiff sold the coal. Thus plaintiff cannot evoke equitable estoppel to override the statute of frauds defense. Equitable estoppel requires reasonable reliance and plaintiff could not have reasonably relied until the defendant had a reasonable chance of receipt of the letter.
Disposition
Judgment affirmed.