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No “Take Backs” In The World Of Business Contracts

Where a buyer signed and sent a draft purchase agreement to a seller but the seller asked for one change to the document, the seller’s request acted as a rejection of the buyer’s draft agreement. Denver Property Partners, LLC v. Brian Sisson, et al.,  2019 NCBC 22 (J. Robinson).  As a result, the seller’s later effort to sign the buyer’s original draft did not create a binding contract.

Plaintiffs owned a shooting range and surrounding land.  In 2017, Defendant The Range at Denver, Inc. (“TRD”), through its agent Defendant Brian Sisson (“Sisson”), expressed interest in possibly purchasing the range and the land.  In late 2017, the parties agreed Sisson would run the shooting range while simultaneously doing due diligence to determine whether TRD would buy the range and land.  While Sisson ran the range, the parties continued to negotiate a purchase agreement.  On February 5, 2018, Plaintiffs’ agent asked Sisson to send him a copy of the signed purchase agreement.  Sisson stated there was no purchase agreement yet in place, but signed and sent the latest draft  to Plaintiffs asking them to sign and return it if “it is good for you.”  The next day, Plaintiffs emailed Sisson by saying all was fine except that the owner of the land (one of the Plaintiffs) needed to be added as a party to the agreement.  No other changes were requested, not even to the $3.3 million purchase price.  Later that day, Sisson sent a  Word version of the agreement and indicated that Plaintiffs could “modify as needed.”   However, Plaintiffs never sent back a revised draft, nor did the parties engage in further sales discussions.  In May 2018, Sisson notified Plaintiffs that TRD was no longer interested in purchasing the range and land.  Plaintiffs sued and asserted several claims against Defendants, including a claim for breach of the purchase agreement that Sisson had signed and sent on February 5. 

Defendants brought a motion for summary judgment on Plaintiffs’ breach of contract claim, contending the parties had never entered into an enforceable purchase agreement.  The Business Court agreed, finding that Plaintiffs’ requests on February 6 amounted to both a rejection of the February 5 draft and a counter-offer for a new agreement.   Because the February 5 drafted had been rejected, the Court held, Plaintiffs could not maintain a breach of contract action based upon it.  Plaintiffs’ effort to accept the February 5 offer after they had rejected it was to no avail.

Based upon this decision, a business should recognize that any change to a proposed agreement constitutes a complete rejection of the earlier proposal, and the business cannot later unilaterally “take back” its earlier rejection and form a binding contract.

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