## Facts

- The Hotzlers owned a five-acre commercial property in Shakopee, Minnesota, containing a former theater building.
- In 1998, Michael Gresser negotiated to buy the property and submitted an unsigned proposed purchase agreement with a survey deadline of August 10, 1998, and a closing date of September 1, 1998.
- The Hotzlers altered terms, initialed the alterations, signed the agreement, and returned it (via their realtor) to Gresser’s attorney on August 4, 1998.
- On August 10, 1998, Gresser initialed the Hotzlers’ changes and signed, but also unilaterally changed (and initialed) two dates: survey delivery to September 10, 1998, and closing to October 15, 1998.
- Gresser and his attorney knew the realtor had not obtained the Hotzlers’ approval for the new date changes and lacked authority to bind the Hotzlers to contractual terms.
- On August 12, 1998, Gresser’s attorney returned the signed document with $2,000 earnest money to the realtor, expecting the Hotzlers to initial the new dates.
- The realtor delivered the document to Calvin Hotzler; Calvin assumed there was a deal but did not read the agreement and left it for Cheryl Hotzler, who was out of town.
- Calvin’s conduct during this period included showing Gresser the property and, according to the record, making statements to tenants suggesting Gresser would be the buyer or new owner.
- On August 13, 1998, before either Hotzler initialed or otherwise accepted Gresser’s date changes, the Hotzlers received and decided to accept a different offer.
- Gresser sued for specific performance and, alternatively, breach of contract; the district court entered judgment dismissing both claims, and Gresser appealed.

## Issues

1. Whether Gresser’s unilateral changes to the survey and closing dates were material variations that converted his response into a counteroffer, preventing contract formation under the mirror-image rule.
2. Whether equitable estoppel barred the Hotzlers from denying a contract based on the realtor’s assurances and Calvin Hotzler’s statements and conduct.
3. Whether the Hotzlers ratified the altered agreement through conduct despite not initialing or accepting the new dates.

## Decision

- The Minnesota Court of Appeals affirmed the judgment for the Hotzlers.
- The court held no enforceable purchase agreement was formed because Gresser’s unilateral date changes were material and therefore constituted a counteroffer rather than an acceptance.
- The court held equitable estoppel did not apply because the record did not establish a knowing misrepresentation by the Hotzlers or reasonable reliance by Gresser.
- The court held there was no ratification because the Hotzlers did not manifest acceptance of the altered terms with knowledge of those changes.

## Legal Principles

- An acceptance must match the offer; a response that changes conditions or adds terms is a counteroffer and does not create a contract absent assent by the original offeror.
- In a real estate purchase agreement, closing and related performance dates are substantive terms; changing them can materially alter parties’ obligations.
- Apparent authority must be traceable to the principal’s manifestations; a buyer’s knowledge that a realtor lacks authority defeats reliance on the realtor’s assurances as proof of assent.
- Equitable estoppel requires a misrepresentation of material fact, knowledge, intent that it be acted on, and reasonable detrimental reliance; it cannot be used to supply mutual assent where contract formation fails.
- Ratification requires affirmance of the transaction with knowledge of material terms; conduct without such knowledge does not constitute ratification.

## Conclusion

Because Gresser’s unilateral changes to the survey and closing dates materially varied the Hotzlers’ signed counteroffer, his response was a counteroffer that the Hotzlers never accepted; the court therefore denied specific performance and contract damages and rejected equitable estoppel and ratification theories.


Gresser v. Hotzler, 604 N.W.2d 379 (Minn. Ct. App. 2000)