## Facts

- Buyers and a residential property owner signed a handwritten “Letter of Intent” for sale of a Baltimore property for $162,000, with $5,000 paid immediately and the balance due at closing by April 17, 2004.
- The letter stated that a “standard form Maryland Realtors contract” would be delivered to the seller within 48 hours and referenced planned terms to be included or deleted in that later contract (financing requirement with buyer guarantee, deletion of inspection contingency).
- The letter also addressed transfer taxes, commissions, and a tenant-lease term, and it was signed by the parties (and the agent).
- The seller accepted the $5,000 deposit check; the record did not establish that the check was negotiated.
- The buyers later delivered a package including a standard Maryland Realtors form contract with additional and more detailed terms.
- The seller signed portions of the form, crossed out certain provisions, did not sign others, and did not return the document or otherwise communicate acceptance to the buyers.
- The seller later withdrew the property from the market; the buyers learned during discovery that the seller had privately signed and modified the form contract.
- The buyers sued for specific performance; the trial court treated the letter and related documents as an enforceable contract, but the intermediate appellate court reversed.
- The state high court granted review to decide whether the letter of intent was binding and whether the seller’s uncommunicated signing/alterations constituted acceptance, including whether extrinsic evidence may be considered on the formation question.

## Issues

1. Whether a negotiated, signed letter of intent that states essential terms is enforceable when it contemplates execution of a later formal real estate contract.
2. Whether a seller’s private signing and alteration of a proposed form contract, without returning it or otherwise communicating assent, constitutes acceptance forming a contract.
3. Whether a court may consider context and other extrinsic evidence to decide whether a contract was formed before applying integration or parol-evidence concepts.

## Decision

- The court affirmed the intermediate appellate court and held no enforceable contract existed.
- The letter of intent was not binding because the parties did not intend it to be the definitive contract; it contemplated a later Maryland Realtors form as the instrument of obligation.
- The later form contract was not binding because the seller did not communicate acceptance; unreturned, privately altered signing was at most an uncommunicated counterproposal.
- The court held it was proper to look beyond the document’s text to determine whether the parties intended to be bound, because contract formation is a threshold question.

## Legal Principles

- Contract formation requires mutual assent to definite terms and an objective manifestation of intent to be bound.
- A preliminary writing labeled or functioning as a letter of intent is not enforceable when the parties intend to be bound only upon execution of a later definitive agreement.
- In evaluating whether a preliminary agreement is binding, courts consider the writing’s language, open terms, partial performance, negotiation context, and customary practice for the transaction type.
- Acceptance generally requires communication to the offeror; uncommunicated assent does not create a contract.
- Material alterations to an offered contract typically operate as a counteroffer, which must be communicated to be legally effective.
- Before applying integration or parol-evidence limits, a court must first determine whether a contract was formed; extrinsic evidence may be considered on that formation inquiry.

## Conclusion

The court held that a signed real estate letter of intent that contemplates a later standard form contract is not enforceable absent intent to be bound immediately, and that an uncommunicated, privately modified signature on a proposed contract does not constitute acceptance; therefore, specific performance was unavailable because no contract was formed.


Cochran v. Norkunas, 398 Md. 1, 919 A.2d 700 (Md. 2007)