Quick Summary
A real estate broker, A.A. Marchiondo (plaintiff), sought payment from Frank Scheck (defendant) following what he believed was Scheck’s breach of their agreement regarding commission for selling real estate. After offering commission terms with a six-day acceptance window and then revoking it on the sixth day—unbeknownst to Marchiondo, who had successfully secured acceptance from a buyer—the dispute arose over whether Scheck could still revoke his offer.
The Supreme Court of New Mexico did not decide whether substantial evidence supported either side. Still, it remanded for a determination whether partial performance had taken place before revocation, which would make Scheck’s offer irrevocable.
Facts of the Case
A.A. Marchiondo (plaintiff), a real estate broker, was approached by Frank Scheck (defendant), who made a written offer promising to pay a commission if Marchiondo succeeded in selling certain real estate to a prospective buyer. This offer stipulated that it had to be accepted within six days.
On the final day of this period, but before Marchiondo’s acceptance, Scheck withdrew his offer in writing. Despite this revocation, later the same day, Marchiondo managed to secure an acceptance from the prospective buyer as per the terms initially laid out by Scheck. Marchiondo then sought to claim the agreed commission, arguing that Scheck had formed a binding contract and subsequently broken it.
Procedural History
- Marchiondo brought a lawsuit against Scheck for breach of contract in a New Mexico state court.
- The trial court dismissed the case.
- Marchiondo appealed the decision to the Supreme Court of New Mexico.
I.R.A.C. Format
Issue
Whether Scheck retained the right to revoke his offer for a unilateral contract before Marchiondo completed his performance by securing a buyer.
Rule of Law
An offeror may revoke an offer for a unilateral contract at any time before the offeree has performed the requested act unless there has been partial performance by the offeree, which results in a contract with conditions.
Reasoning and Analysis
The court acknowledged that many jurisdictions allow an offeror to revoke an offer before an actual performance by the offeree due to the absence of consideration, as there is no obligation on the offeree’s part to perform until they have done so. However, if an offeree begins part performance, some courts hold that such actions render the offer irrevocable during the stipulated time frame because they have relied on the offer in good faith and incurred expenses or effort based on it.
The Supreme Court of New Mexico noted that exclusivity was unnecessary for an offer to become irrevocable upon part performance. It was determined that once partial performance began under an offer for a unilateral contract, a conditional contract formed; this contract became binding upon full performance by the offeree or broker.
Conclusion
The Supreme Court concluded that whether or not Marchiondo had begun partial performance before receiving Scheck’s revocation was a factual matter that needed resolution by the trial court.
Key Takeaways
- An offer for unilateral contracts can generally be revoked by an offeror before acceptance through full performance.
- Partial performance by an offeree can create an irrevocable option contract until completion.
- The case emphasizes that exclusivity is not required for part performance to render an offer irrevocable.
Relevant FAQs of this case
How does partial performance affect the revocability of unilateral contract offers?
Partial performance can make a unilateral contract offer irrevocable, forming a binding contract with conditions.
- For example: If a homeowner offers $100 to anyone who mows their lawn and the person starts mowing, the offer becomes irrevocable until the task is completed.
In unilateral contracts, how does the principle of good faith apply to offeror revocation?
Good faith requires the offeror not to revoke a unilateral contract offer if the offeree has already begun substantial performance.
- For example: If a company promises a bonus for completing a project, they act in bad faith if they revoke the offer after the employee has made significant progress.
Can an offeree seek damages if an offeror revokes a unilateral contract offer pre-performance?
Generally, an offeree cannot seek damages for revocation of a unilateral contract offer before performance, as there is no obligation until completion.
- For example: If someone offers $50 to whoever finds their lost pet, they can withdraw the offer before someone finds the pet without facing legal consequences.
References
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- [justia] Marchiondo v. Scheck
- [google.scholar] A.A. MARCHIONDO, Plaintiff-Appellant, v. Frank SCHECK, Defendant-Appellee.