Facts
- Louis and Sylvia Ragosta sought to buy Allen Wilder’s Brookfield, Vermont property known as “The Fork Shop”; initial discussions in 1985 did not result in a deal.
- In 1987, the Ragostas renewed interest, sent Wilder a purchase letter and a $2,000 check, and began arranging financing.
- On September 28, 1987, Wilder returned the check and sent a letter stating he would sell for $88,000 if, before November 1, the Ragostas appeared with him at the Randolph National Bank with the funds, and only if the property had not been sold.
- The Ragostas received the letter on October 1, called Wilder to state they would accept, and continued arranging financing; they discussed closing dates in early October.
- On October 8, 1987, Wilder informed the Ragostas he was no longer interested in selling; the Ragostas nevertheless arranged financing and appeared at the bank on October 15, but Wilder did not appear.
- The Ragostas incurred about $7,499.23 in loan and closing preparation expenses.
Issues
- Whether Wilder’s September 28 letter created a binding contract or an irrevocable option, such that he could not revoke before November 1.
- Whether Wilder was equitably estopped from revoking because the Ragostas relied by arranging financing and incurring expenses.
- Whether, absent a contract, the promise could be enforced under promissory estoppel to the extent necessary to prevent injustice.
Decision
- The Vermont Supreme Court reversed the decree of specific performance and remanded.
- The court held no binding contract existed; the letter was a unilateral offer that remained revocable because no consideration supported keeping it open.
- The court held the Ragostas’ financing efforts were preparations, not the specified acceptance by performance (appearance at the bank with the purchase price), and revocation occurred before acceptance.
- The court rejected equitable estoppel because the written terms expressly conditioned any sale on the property not being sold, and the elements of equitable estoppel were not met.
- The court declined to resolve promissory estoppel on the existing analysis and remanded for reconsideration under the proper standard, including whether enforcement was necessary to prevent injustice.
Legal Principles
- A promise to keep an offer open is not irrevocable absent consideration supporting an option (or another recognized basis for irrevocability).
- A unilateral offer is accepted only by the performance specified in the offer’s terms; preparations to perform do not constitute acceptance.
- Equitable estoppel requires, among other elements, conduct amounting to a representation of material fact and reliance where the relying party lacked knowledge (and no convenient means of knowledge) of the true facts; reliance inconsistent with explicit written conditions does not satisfy the doctrine.
- Promissory estoppel requires a promise reasonably expected to induce action or forbearance, actual reliance of a definite and substantial character, and a determination that enforcement is required to prevent injustice; the remedy may be limited as justice requires.
Conclusion
The court held that the seller’s letter was a revocable unilateral offer, not an enforceable option or contract, and that the buyers’ financing steps were merely preparatory and did not bar revocation through equitable estoppel; it reversed specific performance and remanded for a proper promissory estoppel analysis focused on whether enforcement was necessary to prevent injustice.