## Facts

- L.R. Bretz, a Montana resident, sought to buy all stock of Beartooth Coal Company, a wholly owned subsidiary of Portland General Electric Company (PGE), an Oregon corporation.
- Bretz sent PGE a detailed letter proposing to purchase the Beartooth stock for $2 million and setting out a procedure for acceptance and closing.
- PGE responded (Aug. 5, 1983) by returning a revised version of Bretz’s proposed terms and asked him to resubmit the letter as an offer for consideration by PGE’s management, while stating management had not approved the terms or price and might require different terms or more compensation.
- Bretz replied (Aug. 10, 1983), adopting many revisions and adding changes, and again described a method for PGE’s acceptance.
- PGE wrote again (Aug. 23, 1983), stating Bretz’s $2 million proposal was inadequate and that PGE would be receptive to an offer at $2.75 million, asking Bretz to consider that price and to resubmit an offer on that basis.
- Bretz sent PGE a signed letter (Aug. 30, 1983) captioned “Acceptance of Offer,” stating he accepted purchase of the stock for $2.75 million.
- The same day, Bretz entered a third-party coal sale contract relating to the Beartooth property, allegedly in reliance on believing he had a binding deal with PGE.
- PGE later refused to proceed with the stock sale, taking the position that no contract had been formed; Bretz sued for breach of contract and, alternatively, equitable estoppel.

## Issues

1. Whether the parties’ correspondence created an enforceable contract for the sale of Beartooth stock satisfying Montana’s statute of frauds governing securities transactions.
2. Whether PGE was equitably estopped from asserting the statute of frauds based on Bretz’s alleged reliance on PGE’s communications.

## Decision

- The Ninth Circuit affirmed summary judgment for PGE after de novo review.
- The court held the correspondence did not form a binding stock-sale contract and did not satisfy Montana’s statute of frauds.
- The court held PGE was not equitably estopped from raising the statute of frauds because Bretz’s reliance on a supposed contract was unreasonable as a matter of law.

## Legal Principles

- Contract formation turns on objective manifestations of intent; the parties’ use of the words “offer” and “acceptance” is not controlling.
- A communication is an offer only if a reasonable recipient would understand it as a present commitment to be bound upon acceptance; language indicating willingness to consider a proposal is an invitation to negotiate.
- Under Montana’s statute of frauds for securities, enforceability requires a writing (or integrated writings) signed by the party to be charged that evidences mutual assent and the essential terms of the agreement; writings reflecting ongoing negotiations are insufficient.
- Equitable estoppel cannot be used to impose liability where objective evidence shows no contract was formed; reliance must be reasonable in light of the parties’ communications.

## Conclusion

Because PGE’s correspondence signaled continued negotiation rather than an unequivocal commitment to sell, Bretz’s responsive “acceptance” functioned as a new offer and the writings did not satisfy Montana’s statute of frauds; without a formed contract, Bretz’s asserted reliance could not support equitable estoppel, so summary judgment for PGE was affirmed.


Bretz v. Portland Gen. Elec. Co., 882 F.2d 411 (9th Cir. 1989)