Cochran v. Norkunas

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Rebecca Cochran, et al. v. Eileen W. Norkunas No. 43, September Term, 2006. CONTRACTS - FORMAL REQUISITES - LETTERS OF INTENT: Letter of intent was not enforceable as a binding contract for the sale of real property where the letter of intent unambiguously indicated that a standard form contract would be delivered and specified how certain terms in that contract would be construed. CONTRACTS - FORMAL REQUISITES - OFFER AND ACCEPTANCE: Contract for the sale of real property was not enforceable where the offeree did not manifest acceptance of the contract by mailing or other action. In the Circu it Court for B altimore C ity Case No. 24-C-04-002546 IN THE COURT OF APPEALS OF MARYLAND No. 43 September Term, 2006 REB ECC A CO CHR AN, E T AL . v. EILEEN W. NORKUNAS Bell, C.J. Raker *Wilner Harrell Cathell Battaglia Greene, JJ. Opinio n by Rak er, J. Filed: March 20, 2007 * Wilner, J. now retired, participated in the hearing and conf erence of this case w hile an active membe r of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion. This case arises o ut of the ex ecution of a letter of inten t for the purc hase of p roperty in Baltimore City between petitioners, Rebecca Cochran, et al., ( Buyers ) and respondent Eileen W. Norkunas ( Seller ). We granted certiorari to consider the followin g two questions: 1. When a contractual document, which states that it is a complete agreement, contains an integration clause and a clause stating that it cannot be modified except by an agreeme nt in writing signed by the p arties is duly exec uted by all parties, is it an error for a court to look outside of the four corners of the document to determine that a contract was formed? 2. Is a negotiated letter of intent that contains all essential and material terms of a proposed contract to be entered, supported by consideration, and executed by all parties an enforceable agreement under Maryland law? Cochran v. Norkunas, 393 Md. 477, 903 A.2d 41 6 (2006). W e shall hold that because the parties did no t intend to be bound, the letter of inte nt is unenfo rceable. W e shall also ho ld that the contract is unenforcea ble because it was no t accepted by the Seller. I. Eileen Norkun as is the ow ner of pro perty known as 835 McHenry Street, Baltimore, Maryland 21230. T he petitioners, Robert and Hope Grove, and Robert and Rebecca Cochran, expressed their interest in purchasing the property. Assisted by a real estate agen t, the Buyers drafted a handwritten letter of intent that spelled out key terms o f an of fer. The text of the letter of intent stated as follows: 3/7/04 LETTER OF INTENT We, Rebecca Cochran, Robert Coch ran, Hope G rove and Rob ert Grove, Buyers offer to buy 835 McHenry Street, Baltimore, Md. 21230 for $ 162,000. Payme nt by $5,000 c heck, this da te and $157,00 0 by certified or cashiers fu nds not later th an April 17, 2004. A standard form Maryland Realtors contract will be delivered to Seller within 48 hours. Seller to pay only 1/2 normal transfer taxes and a 3% commission to Lon g & Fo ster. All other c osts of closing to be paid by buyers. The contract will contain a financing requirement for buyers, but buyers will guarantee closing and not invoke the financing contingency. We w ill de lete the standard h ome insp ectio n contingency. [written in margin:] Buyer to honor seller s lease and offer tenants any renewal up to 12 months. Buyers: Robert Cochran: /s/ Rebecca Cochran: /s/ Hope Grove: /s/ Robert Grove: /s/ Agent: Brian Be st: /s/ [1] Seller: Eileen W. Norkunas: /s/ 1 The Buyers jointly stipulated that Brian Best was their real estate agent. Ms. Norkun as did not h ave an ag ent. -2- The Buyers presented the letter of intent and a deposit check for $5,000 to Ms. Norkunas. The parties signed the letter of intent on March 7, 2004. The Seller accepted the check, but there is no ev idence in the record that the check was ever deposited or negotiated by the Seller. Shortly after signing the letter of intent, Ms. Norkunas received a package of docume nts from the Buyers real esta te agen t. The package included a cover letter that stated as follows: Dear Ms. Norkunas, It was a pleasure meeting you yesterday. Enclosed with this folder are all the documents needed to complete the sale of your home. The basic Real Esta te contract, alo ng with a c ouple of docume nts I need you to f ill out to ra tify the contract. The first is a Disclosure/Disclaimer. You can either fill out the first 3 pages (the Disclosure) or you can just sign the last page (the Disclaimer). Also included is a property fact sheet. This is just basic information on the property that needs to accompany the contract. The Gro ves and the Cochrans are so excited about your hom e. If you have ANY questions please fee l free to call me or have someone near you look over the contract. Rest assure[d] that we want this to go as smooth as possible for you and both the Groves a nd Coc hrans aske d me to tell you if there is anything they can do please f eel free to ask. I look fo rward to hearing from you. You can either fax m e the contra ct and discla imer back or I ll include a Fed-X envelope for you to send back. Thank you again /s/ Brian Best -3- The package of docum ents contained a number of pre-printed forms, includ ing a form titled Residen tial Contract o f Sale, pu blished by the Maryland Association of Realtors, together with several form addenda.2 The contract incorporated the terms of the letter of intent, and it contained several additional provisions that were not included in the letter of intent. 3 Many of the addenda appear to be forms published by the Maryland Association of Realtors. At least one of the addenda appears to be a form that the Buyers broker developed. Some of the documents had blanks completed by the Buyers and/or their agent, including the financing contingency form. The Property Inspections contingency addendum that was included a ppears to h ave been struck throu gh, as prom ised in the letter o f intent. After receiving the package of documents, the Seller read the contract and addenda. The Seller signed the contract and addenda on the majority of the signature lines, but the 2 The add enda w ere titled as follo ws: (1) Co nventiona l Financing Adden dum to Contract of Sale, (2) Understanding Whom Real Estate Agents Represent, (3) General Addendum to Contract of Sale, (4) Notice to Purchaser of Purchaser s Rights Under Maryland s Property Disclosure Law, (5) Notice to Buyer, Addendum Required by Maryland Homeow ners Association Act, (6) Disclosure of Information on Lead-Based Paint and LeadBased Paint Hazards, (7) Affiliated Business Arrangement Disclosure Statemen t, (8) Special Conditions (1): Commission to Long And Foster Realtors, (9) Notice to Buyers of P roperty in Baltimore City, (10) Property Inspections, (11) Commission, Fee Sharing and Bonus Disclosure, and (12) S ellers Proceeds from S ettlement (Sellers Net). 3 For example, the contract provided that: (1) time was of the essence, (2) settlement would occur on Ap ril 17, 2004, (3) the Seller would pay the costs of any agricultural land transfer tax, (4) the Seller would pay to repair any termite infestation damage, (5) the Seller would ensure all electrical, heating, air conditioning, plumbing, and any other mechanical systems and related equipment, appliances, and smoke detectors were in working condition, and (6) certain items of personal property would be included in the conveyance of the prop erty. -4- Seller crossed out and did not sign the financing contingency provisions in paragraphs 20 and 21. After reviewing the documents, the Seller did not return the documents to the Buyers or their agent, however. Nor did she otherwise communicate to the Buyers or their agent that she had accepted their offer. The Seller simply retained the signed documents. After a week or so had passed, the Seller communicated to the Buyers that she was taking the property off the marke t. The Buyers initially filed suit seeking specific performance of the letter of intent. At her deposition, the Seller, Ms. Norkunas, was asked about her actions with regard to the letter of intent and the package of documents. During this deposition, the Buyers first learned that the Seller had signed portions of the documents. The colloquy proceeded as follows: [Ms. Norkunas]: I was probably going through [the contract and addenda] at the time and kind of getting overwhelmed the more I went through it and questioning parts and kind of scratching out some parts. This was what I thought was going to be my coun teroffer. I sign ed wha t I thought was going to be a counteroffer, and then it just got so ov erwhelm ing, it was too much. It was just too much. [Buyers co unsel]: W ell, you did sign th e docum ent; correct? [Ms. Nork unas]: I signed my countero ffer. [Buyers counsel]: On Page 9 of 9 of Exhibit No. 3 [the contract] is that your signature on the left-han d side, the third signature down? [Ms. Norkunas]: Yes. [Buyers counsel]: And that was placed by you on the do cument; correct? -5- [Ms. Norkunas]: Un-huh. [Buyers counsel]: It was placed there on March 11, 2004? [Ms. Norkunas]: Un-huh. [Buyers counsel]: Yes? [Ms. Norkunas]: Yes. *** [Buyers counsel]: What in the contract form th at was sen t to you, Exhibit 3, were terms that were not contained in the original offer as you state or I ll just lim it it to that. What in the contract contained new terms that were not in the original offer? [Ms. Norkunas]: I think the financing. [Buyers counsel]: For the record, state what paragraph number you re pointing to [on the con tract]. [Ms. Norkunas]: Pardon me. Page 4 of 9, Paragraphs 20, 21. [Buyers counsel]: Those are the ones you in fact crosse d out; right? [Ms. Norkunas]: Yes. I was really I don t know if this adheres to your same question, but I was really very conflicted about who was representing me in this deal, very conflicted. [Buyers counsel]: Well, did you call Mr. Best or anybody involved in that docum ent, the letter of in tent and the contract, and say there are new terms he re that aren t in the original offer; I think they sho uld be take n out? [Ms. Norkun as]: No, I did n t say that. I was just getting so over my head and I wasn t being represented. I knew I was making -6- a big mistake, and I just changed my mind. I said I can t do this. I can t do this. [Buyers counsel]: S o is it accurate to say that you never called Mr. Best back or M r. Grov e, Mrs. Grove, Mr. Cochran, Mrs. Cochran and said there are some thing s about this c ontract I have a problem with; can w e take them out or c an you expla in them to me? You didn t do that, did you? [Ms. N orkun as]: No . After learning for the first time at Ms. N orkunas d eposition tha t she had p rivately signed the contract and addenda that had been transmitted to her, the Buyers filed an amended complaint in which they asked the trial court to order that the Letter of Intent and Contract of Sale be tween the parties be sp ecifically enforced. The parties filed cross motions f or summ ary judgmen t. The parties stipulated that the [Buyers] we re not aware that [Ms. Norkunas] signed (and crossed out paragraphs 20 and 21 of) the Residential Contract of Sale dated March 7, 2004 until a copy of the Contract w as produced by [M s. Norkunas] throug h discovery in these proceedings. The Buyers also filed an affidavit asserting that the changes Ms. Norkunas had made to the unreturned contract documents would have been acceptable to the Buyers. The Circuit Court for Baltimore City granted summary judgment in favor of the Buyers. The Order granting su mmary judg ment in favor of the Bu yers stated that the court was ordering sp ecific performance because the Letter of Intent and the Ma ryland Standard Residential Contract sig ned by all parties constitute the contract in this case and together they -7- constitute an enf orceab le contra ct for sa le. Ac cordin gly, the court ordered that Ms. Norkunas is to settle the p rope rty known as 83 5 M cHe nry Street in Baltimore, Maryland with Plaintiffs pursuant to the terms of the executed contract within 60 days. Ms. Norkunas appealed.4 The Court of Special Appeals, reviewing whether it was error to grant summa ry judgment for the Buyers, reversed the Circuit Court, holding that the Circuit Co urt erred in determining that an e nforce able co ntract w as form ed betw een the parties. Norkunas v. Cochran, 168 Md. App. 192, 895 A.2d 1101 (2006). The intermediate appellate court first concluded that the language of the letter of intent did not indicate that the parties had reached final agreeme nt at the time th e letter of intent was signed. Second, the court held that the Seller did not accept the contract, even though she signed the documents, because the Seller did not mail the signed contract to the Buyers so as to communicate her acceptance. Based on these holdings, the Cou rt of Specia l Appeals vacated the Circuit Court s judgment. The Buyers filed a petition for a writ of certiorari, which we gra nted. Norkunas, 393 Md. 477, 903 A.2d 416. 4 The Bu yers moved to dismiss the appeal, alleging that the order did not fully dispose of all claims, such as ancillary damages and attorneys fees. Ms. Norkunas responded that the court s order w as imm ediately ap pealab le pursu ant to M d. Cod e (1973 , 2006 R epl.Vo l.) § 12-303(3)(v) of the Courts and Judicial Proceedings Article, which authorizes an interlocutory appeal from an o rder [f]or the sale, conveyance , or delivery of real or personal proper ty. The Court of Special Appea ls held that the Circuit Court s order was app ealable pursuant to this provision . The issue is n ot before th is Court. -8- II. We review de novo a circuit c ourt s g rant of s umm ary judgm ent. Pasteur v. Skevofilax, 396 Md. 405, 440, 914 A.2d 113, 134 (2006). We independently review the record to determine whether the parties pro perly generated a dispute of material fac t and, if not, whether the party in whose favor judgment was entered is entitled to judgment as a matter o f law. M d. Rule 2-501 (f). See also Hill v. Knapp, __ Md. __, __, 914 A.2d 1193, 1199 (2007 ). On appeal from an order entering summary judgment, we review only the legal grounds relied upon by the trial court in granting summary judgment. Md. R ule 2-501(f). See also River W alk Apartments, LLC v. Twigg, 396 Md. 527, 541-42, 914 A.2d 770, 778-79 (2007). In the case sub judice, there is no ge nuine disp ute of ma terial fact. -9- III. A letter of intent is a form of a preliminar y agreemen t.5 Letters of in tent have led to much misunderstanding, litigation and co mmer cial cha os. 1 J OSEPH M. P ERILLO , C ORBIN ON C ONTRACTS § 1.16, p. 46 (Rev. ed. 1993). It is recognized that some letters of intent are 5 Preliminary agreements whether oral or in writing cannot be easily generalized, as they range from firm binding commitments to agreements that presuppose no binding obligations on the parties. See Burbach Broadcasting Co. of Del. v. Elkins Radio, 278 F.3d 401, 406-07 (4th Cir. 200 2); 1 J OSEPH M. P ERILLO , C ORBIN ON C ONTRACTS § 2.8 and § 2.9, p. 131-62 (Rev. ed . 1993). Sev eral courts an d comm entators hav e found it h elpful to distinguish between different types of prelimin ary agree ments. See 1 E. A LLAN F ARNSWORTH, F ARNSWORTH ON C ONTRACTS § 3.26b, p. 391-400 (3rd ed. 2004) (discussing categories and com piling cases); C ORBIN ON C ONTRACTS, supra at § 2.8 and § 2.9, p. 131-62 (addressing partial agreeme nts and situations where f ormal docum ents are contemplated). Courts have identified four main categories of preliminary agreements; these categories are similar to those that have been identified for letters of intent. Cf. C ORBIN ON C ONTRACTS, supra at § 2.9, p. 157-58. Judge Pierre N. Leval s often cited decision, Teachers Ins. and Annuity Ass n v. Tribune Co., 670 F.Supp. 491 (S.D.N.Y. 1987), described two types of prelimin ary agreeme nts that have binding fo rce. A fully bin ding prelim inary agreement (also known as a Tribune Type I ) occurs when the parties have reached complete agreement (including the agreement to be bound) on all issues perceived to require negotiation. Id. at 498. For such an agreement, a more elaborate formalization of the agreement is no t nec essa ry because the agreement is preliminary only in form and is thus enforcea ble as it stand s. Id. The second type, a binding preliminary commitment (also known as a Tribune Type II ), exists when the parties accept a mutual commitment to negotiate together in good faith regarding any remain ing ope n terms . Id. See also C ORBIN ON C ONTRACTS, supra at § 2.8(b), p. 142-4 4. If negotia tions fail, no f inal contract e xists because this type of prelim inary agreem ent does n ot commit the parties to the ir ultimate contractual objective, in contrast to a Tribune Type I agreem ent. C ORBIN ON C ONTRACTS, supra at § 2.8(b), p. 142-44. The types of preliminary agreements that are generally not binding include the agreement with open terms, wh ere the parties agree to be bound b y some terms but leave others open for the court to fill in. See F ARNSWORTH ON C ONTRACTS, supra at § 3.26b, p. 399. The fo urth type o f prelim inary agre emen t, one that is not con sidered an e nforceab le agreeme nt, is an agreem ent to agree. See C ORBIN ON C ONTRACTS, supra at § 2.8(a), p. 13142. -10- signed with the belief that they are letters of commitment and, assuming this belief is shared by the parti es, the let ter is a m emoria l of a co ntract. Id. In other cases, the parties may not intend to be bou nd unti l a furth er writin g is com pleted. Id. Commen tators have analyzed the variety of cases in which parties contemplated memorializing their terms of agreement into a more formal document. Based on this analysis, they hav e classif ied letters of inten t into fou r catego ries. See C ORBIN ON C ONTRACTS, supra at § 2.9, p. 157-58. These four categories are described as follows: (1) At one extreme, the parties may say specifically that they intend not to be bound until the formal writing is executed, or one of the parties has announced to the other such an intention. (2) Next, there are cases in which the y clearly point out one or more specific matters on which th ey must yet agree before negotiations are concluded. (3) Th ere are many cases in which the parties express definite agreement on all necessary terms, and say nothing as to other relevant matters that are not essential, but that other people often include in similar contracts. (4) At the opposite extreme are cases like those of the third class, with the addition that the parties expressly state that they intend their present expressions to be a binding agreement or contract; such an express statement should be conclusive on the question of their intention. Id. (interna l citations omitted ). A valid contract generally has been made if a letter of intent proper ly falls with in either the third or the fo urth cate gory. Id. at 158. IV. We must decide whether the negotiated letter of intent at issue in this case created an enforceable agreement und er Maryland law. Petitioners asse rt that the letter of intent -11- constitutes an enforceable contract because it was formed by offer and acceptance, supported by consideration, contained all definite and material terms, and was signed by the parties. Respondent replies that the letter of intent was not an enforceable contract because it was not intended, based on an objectiv e review, to be the parties final expression of their mutual assent. Our ana lysis begins with whether the letter of inte nt constitutes an enf orceable agreeme nt. It is universally accepted that a manifestation of mutual assent is an essential prerequisite to the cre ation or forma tion of a contrac t. See Creel v. Lilly, 354 Md. 77, 101, 729 A.2d 38 5, 398 (19 99); Eastover Stores, Inc. v. M innix, 219 Md. 658, 665, 150 A.2d 884, 888 (1959). Manifestation of mutual assent includes two issues: (1) intent to be bound, and (2) definite ness of terms. See C ORBIN ON C ONTRACTS, supra at § 2.8, p. 131. Failure of parties to agree on an essential term of a contract may indicate that the mutual assent required to make a contra ct is lack ing. See Safeway Stores v. Altman, 296 Md. 486, 489-90, 463 A.2d 829, 831 (1983 ); Klein v. Weiss, 284 Md. 36, 63, 395 A.2d 126, 141 (1978). If the parties do not intend to be bound until a final agreemen t is execu ted, there is no co ntract. See Eastover Stores, Inc., 219 Md. at 665, 150 A.2d at 888; Peoples Drug Store v. Fenton, 191 Md. 489, 494, 62 A.2d 273, 275-76 (1948 ). See also C ORBIN ON C ONTRACTS, supra at § 2.9, p. 151; 1 R ICHARD A. L ORD, W ILLISTON ON C ONTRACTS § 4:8, p. 302 (Rev. ed . 1990); Restatement (Second ) of Con tracts § 27 (1 981). In the case sub judice, we assume arguendo that the letter of intent contained all essential material terms, and we need not address -12- whether the letter of intent contained all the materia l terms essen tial to comple te a contract, because it is clear that the parties did not intend to be bound by the letter of intent alone. Courts and commentators have identified several factors that may be helpfu l in determining whether the parties have manifested an intention to be bound. Judge Pierre N. Leval, writing for the United States District Court for the Southern District of New York, set forth five factors that have been widely cited by other courts: (1) the language of the preliminary agreement, (2) the existence of open terms, (3) whether partial performance has occurred, (4) the context of the negotiations, and (5) the custom of such transactions, such as whether a standard form contract is widely used in similar transactions. Teachers Ins. and Annuity Ass n v. Tribune Co., 670 F .Supp . 491, 49 9-503 (S.D.N .Y. 198 7). See also Burbach Broadc asting Co . of Del. v. Elkin s Radio, 278 F.3d 401, 40 8 (4th Cir. 2002). Comment (c) to the Re statement (S econd) o f Contrac ts identifies additional factors including: (1) whether the agreement has few or many details, (2) whether the amount involved is large or sm all, and (3) whether it is a common or unusual contract. Restatement (Second) of Contracts § 27, cmt. c. See also C ORBIN ON C ONTRACTS, supra at § 2.9, p. 159. It is recognized that any or all of these factors may be shown by oral testimony or by correspondence or other preliminary or partially complete writings.6 See Restatement 6 We note that parol evidence may be used to contravene the legal existence of a contrac t. Gordy v. Ocean Park, Inc., 218 Md. 52, 62, 145 A.2d 273, 278 (1958 ). See also Burke v. Dulaney, 153 U.S. 228, 234, 14 S .Ct. 816, 81 8, 38 L.Ed . 698 (189 4); In re Murphy, 810 F.2d 454, 455 (4 th Cir. 1987). Parol evidence presuppose s the existenc e of a legally effective written agreement. Thus, parol evidence need not b e exclude d until it is established that a contrac t is in effect. -13- (Second) of Contracts § 27, cmt. c. Each of the above-n amed fa ctors may be re levant in determining whether a letter of intent is enforceable, but the most important factor is the langua ge of th e agree ment. See Teachers Ins., 670 F.Supp. at 499. We analyze the parties intent to be bound according to the principles of Maryland contract law because petitioner asserts that a valid contract was formed. Maryland adheres to the principle of the objective interpretation of contracts.7 See Myers v. Kayhoe, 391 Md. 188, 198, 892 A.2d 52 0, 526 (20 06); Tomran v. Passano, 391 Md. 1, 13, 891 A.2d 336, 344 (2006); Kasten Constr. v. Rod Enterprises, 268 Md. 318 , 328, 301 A.2d 1 2, 17-18 (1973). If the language of a contract is unambiguous, we give effect to its plain meaning and do not contemp late what the parties may have subjectively intended by certain terms at the time of formation.8 See Dennis v. Retirement System, 390 Md. 639, 656-57, 890 A.2d 737, 747 7 The interpretation of a contract, including the question of whether the language of a contract is ambiguous, is a question of law subject to de novo review . See Towson v. Conte, 384 Md. 68, 78 , 862 A.2d 941 , 946 (2004). 8 The United States Court of Appeals for the Fourth Circuit described the challenge that a court faces when granting su mmary judg ment on a matter of co ntract interpreta tion in Washington Metropolitan Area Transit Authority v. Potomac Investment Properties, Incorporated, 476 F.3d 231 (4th Cir. 2007). The Fourth Circuit stated as follows: A court faces a conceptually difficult task in deciding whether to grant summary judgmen t on a matter o f contract interpretation. Only an unambiguous writing justifie s summa ry judgment w ithout resort to extrinsic evidence, and no writing is unambiguous if susceptible to two reasonab le interpretations. The first step for a court asked to grant summary judgment based on a contract s interpretation is, therefore, to determine whether, as a matter of law, the contract is ambiguous or unambiguous on its face. If a court properly determines that the contract is unambiguous on the dispositive issue, it may then properly interpret the contract as a matter of law and grant (contin ued...) -14- (2006); Rourke v. Amchem, 384 Md. 329, 354, 863 A.2d 926, 941 (2004). Thus, our search to determine the mean ing of a co ntract is focused on the fou r corners of the agreem ent. Walton v. M ariner He alth, 391 Md. 643 , 660, 894 A.2d 5 84, 594 (2006). Under the objective theory of contracts, we look at what a reasonably prudent person in the same position would have understood as to the meaning o f the ag reeme nt. Id. Ambig uity arises if, to a reasonable person, the language used is susceptible of more than one meaning or is of doubtful mean ing. See United Services v. Riley, 393 Md. 55, 80, 899 A.2d 819, 833 (2006). As we have previously explained: A court cons truing an ag reem ent u nder [the objective th eory] must first determine fro m the lang uage of th e agreem ent itself what a reasonable person in the position o f the parties w ould have meant at the time it was effectuated. In addition, when the language of the contract is plain and unambiguous there is no room for construction, and a court must presume that the parties meant what they expressed. In these circumstances, the true test of what is meant is not what the parties to the contract intended 8 (...continued) summary judgment becau se no in terpretiv e facts a re in gen uine issu e. Even where a court, how ever, determ ines as a m atter of law that the con tract is ambiguous, it may yet examin e evidenc e extrinsic to the contrac t that is included in the summary judgment materials, and, if the evidence is, as a matter of law, dispositive of the interpretative issue, grant summary judgment on that basis. If, however, resort to extrinsic eviden ce in the summary judgment materials leaves genuine issues of fact respecting the contract s proper interpretation, summary judgment must of course be refused and interpretation le ft to the trier of f act. Therefore, summa ry judgment is a ppropriate w hen the contract in question is unambiguous or when an ambiguity can be definitive ly resolved by referen ce to ex trinsic ev idence . Id. at 235 (internal citations omitted). -15- it to mean, but what a reasonable person in the position of the parties w ould ha ve thou ght it me ant. General Motors Acceptance Corp. v. Daniels , 303 Md. 254, 261, 492 A.2d 1306, 1310 (1985). When determining intent, the customary, ordinary, and accepted meaning of the language is used. Walton, 391 Md. at 660, 894 A.2d. at 594. In addition, Maryland utilizes the following rule of construction when interpreting contracts: A recognized rule of construction in ascertaining the true meaning of a contract is that the contract must be construed in its entirety an d, if reasonab ly possible, effe ct must be g iven to each clause so that a court will not find an interpretation which casts out or disregards a meaningful part of the language of the writing unless no othe r course ca n be sensib ly and reasona bly follow ed. Sagner v. Glenangus Farms, 234 Md. 156 , 167, 198 A.2d 2 77, 283 (1964). V. We first review the language of the letter of intent to determine if the parties intended to be bound. The letter of intent is a one-page, handwritten document with essentially five paragraphs. The first paragraph states that the Buyers offer to buy the property for $162,00 0 with paym ent by $5,00 0 check, th is date and $157,000 not later than April 17, 2004. The seco nd parag raph states tha t a standard form Maryland R ealtors Con tract will be delivered to Seller within 48 hours (emphasis added). The letter of intent also sets f orth some financing details, specifically stating that [t]he contract will contain a financing requirement for buyers, but buyers will guarantee closing and not invoke the financing contingency (emphasis added). The Buyers also stated that [w]e will delete the standard -16- home inspection c ontingenc y (emphasis added). Fin ally, the letter of inten t states in the margin that, B uyer to ho nor selle r s lease s. We conclude that a reason able person wo uld have unders tood the letter of intent to mean that a formal contract offer was to follow the letter of intent. Three of the paragraphs in the letter of intent m ake direct ref erence to the Maryland Realtors Contract and the terms that shall be inclu ded in that c ontract. The plain language of the letter of intent in this case is unambig uous and indicates clea rly that the parties inte nded to fin alize the prop erty sale through a standard f orm M aryland Rea ltors Contra ct. This Court has noted previously that parties may enter into a binding informal or oral agreement to execute a written con tract; and, if the p arties contemplate that an agreement between them shall be reduced to w riting before it shall become b inding and com plete, there is no contract until the writing is signed. Eastover Stores, Inc., 219 Md. at 665, 150 A.2d at 888. In Eastover Stores, Inc., the owner of a shopping center contended that an enforcea ble contract was entered into when the contractors bid was accepted, as opposed to when a formal w ritten agreem ent was e xecuted b y the parties app roximately one month later. Id. at 664-65, 150 A.2d at 887-88. We noted that parties w ho contem plated that the ir agreement would b e reduced to a final w riting before it would b ecome b inding w ere at liberty to withdraw from negotiations prior to when the fina l writing is signed . Id. at 665, 150 A.2d at 888. We then affirmed the lower court s determination that the contractors had not manifested their assent to final formation of the contract prior to when the agreement was -17- finally executed by the contractors and delivere d to the s hoppin g cente r own er. Id. at 666, 150 A.2d at 888. Similarly, in Peoples Drug Stores, 191 Md. 489, 62 A.2d 273, we held that the parties did not intend to conclude their lease and building contract via correspondence letters, but were only settling the terms of a future agreement that they planned to enter after the particulars were completel y reconc iled. Id. at 495, 62 A.2d at 276. We summarized the relevant contract law as follows: It is familiar law that a valid contract may be entered into by letters. Where one party makes a definite offer by letter and the other party accepts the offer unconditionally on the same terms on which it was mad e, the letters con stitute a bindin g contract. But, of course, the parties can make the comp letion of their contract depend upon the execution of a written instrument. The question whether the parties ne gotiating a co ntract intende d to be bound by their oral agreement but contemplated a written instrument merely as evidence of their agreement, or whether they did not intend to bind themselves until a contract was prepared and signed by them, must be decided from th e facts and circumstances in each particular case. If it appears that the terms of the contract are in all respects definitely understood and agreed upon, and there is nothing left for future settlement, and that a part of the understan ding of the parties is that a written contract embodying these terms s hall be exec uted by them to serve merely as evidence of their agreement, the mere fact that the parties und erstood tha t the contract s hould be r educed to writing does not leave the transaction incomplete and without binding force. If, on the other hand, it appears that the parties, although they agree d upon a ll the terms o f the contrac t, intended to have them reduced to writing and signed before the bargain should be consid ered as co mplete, ne ither party will be bound until that is done, as long as the contract remains without any acts done under it on either side. -18- Id. at 493-94, 62 A.2d at 275-76 (internal citations omitted) (emphasis added). In Peoples Drug Stores, the offer and acceptance letters indicated that the final agreement was subject to approval of the lease. Id. at 492, 62 A.2d at 275. We concluded that the parties intended to be bound by a final agreement that was carefully drawn and that the correspondence leading up to th at agree ment w as not e nforce able. Id. at 494-95, 62 A.2d at 276. In the case sub judice, the letter of intent states explicitly that a standard form Maryland Realtors C ontract will be delivered to Seller within 48 hours and describes how certain terms of that contract will be construed.9 We conclude that the language in the letter of intent is indicativ e of an inte nt to mem orialize the pro perty sale through a final standard form contract, just as a final agreement was intended by the parties in Eastover Stores, Inc. and Peoples Drug Stores. Here, there is no question that the parties demonstrated an intent to use a M aryland Rea ltors Contra ct to forma lize their agree ment. 9 We note that the label letter of intent is not necessarily controlling, although it may be a helpf ul indica tor of th e parties intentio ns. See Burbach Broadcasting Co. of Del. v. Elkins Radio, 278 F.3d 401, 406 (4th C ir. 2002) ( C alling a doc ument a le tter of intent implies, unless circumstances suggest otherwise, that the parties intended it to be a nonbinding expression in contem plation of a future contrac t. (emphasis in original)); Teachers Ins. and Annuity Ass n v. Tribune Co., 670 F .Supp . 491, 49 7 (S.D .N.Y. 1 987) ( Labels such as letter of intent or commitment letter are not necessarily controlling although they may be help ful indicator s of the par ties intentions. ). Similarly, express conditions are indic ative of parties in tent. See, e.g., Par amoun t Brokers, Inc. v. Digital River, Inc., 126 F.Supp.2d 939, 947 (D.Md. 2000) (concluding that an express co ndition in a letter showed the parties intent to make a finalized agreement); Phoenix Mut. Life Ins. v. Shady Grove Plaza Ltd., 734 F.Su pp 1181 , 1186 (D .Md. 199 0) (holding that the parties d id not enter an en forceable contract w here a letter of intent was e xpressly non- binding); Teachers Ins., 670 F.Supp. at 507-08 (determining that a letter of intent which expressly stated it would be binding was an enfo rceable contract). -19- Petitioner s assertion that the letter of intent is enforceable because it was formed by offer and acce ptance, sup ported by con sideration, satisf ied the statute of frauds, and contained all definite and material terms is unpersuasive because there is no binding contract if the parties d o not intend to be boun d until a form al docu ment is e xecute d. See Eastover Stores, Inc., 219 Md. at 66 5, 150 A .2d at 888; Peoples Drug Stores, 191 Md. at 494, 62 A.2d at 275-7 6. See also C ORBIN ON C ONTRACTS, supra at § 2.9, p. 151 ; W ILLISTON ON C ONTRACTS, supra at § 4:8, p. 30 2; Restatem ent (Second) of Contracts § 27; Restatement (First) of Contracts § 26 (1932). As stated by Profe ssor Corbin, If the court is convinced that the parties intended not to be bound until the formal document is executed, there is no contract until its execution by both parties. CORBIN ON C ONTRACTS, supra at § 2.9, p. 151. The language of the letter of intent does not support the Buyers contention that the parties had reach ed a final ag reement re garding the sale of the p roperty at the time when the letter of intent was signed beca use the parties had no inten t to be bound until the standa rd form Maryland Realtors Contract was signed. Th us, the letter of in tent is not an e nforceab le contract for a sale of the property an d is not subje ct to specific performance. See Post v. Gillespie, 219 Md. 378, 386, 149 A.2d 391, 396 (1959) (holding that specific performance is not an available remedy when a valid and enforceable contract is lacking). The letter of intent does not fall into one of the categor ies of enfo rceable letters of intent or preliminary agreements. See C ORBIN ON C ONTRACTS, supra at § 2.9, p. 157-58; Teachers Ins., 670 F.Supp. at 491. W e hold that th e letter of inten t is the type of pre liminary agree ment to -20- agree that has generally been held unen forceable in Maryland.10 See Horsey v. Horsey, 329 Md. 392, 420 , 620 A.2d 305 , 319 (1993). VI. We now consider whether the standard Maryland Realtor s Contract is enforceable.11 Petitioners argue that th e contract is e nforceab le because the docum ent states that it is a complete agreement, contains an integration clause and a clause stating that it cannot be modified except by an agreement in writing signed by the parties, and was duly executed by all parties. Petitioners further assert that the Court of Special Appeals erred by holding that delivery of the con tract by the Seller w as required to create an e nforceab le contract. Respondent replies that the contract was not enforceable because it was neither delivered nor 10 Because the parties inte nt can be discerned on the face of the letter of intent, we do not consider other factors that have been utilized to determine whether parties have manifested an intent to be bound. For example, we do not consider the relevance of the fact that the Buyers delivered a deposit check of $5,000 upon the s igning of th e letter of inten t. The Buyers have not alleged that the Seller negotiated the check improperly or that the Seller ever negotiated the check, and these is sues are no t before this C ourt. We n eed cons ider only the language in the letter of intent stating that the Buyers offered to buy the property by $5,000 check, this date and $157,000 by certified or cashiers funds. The aforementioned language expresses the Buyers offer, but does not persuade us that tran sfer of the d eposit chec k ind icate d a fi naliz ed sa le of the p rope rty. 11 In their petition for writ of certiorari, petitioners ask whethe r it is error for a court to look outside the four corners of a document to determine if a contract was formed. As discussed supra, note 6, extrinsic evidence may be used to contravene the legal existence of a contract. Thus, on review of a summary judgment motion where there are no disputed material facts, a court s analysis may consider all the facts and circumstances of the case. The parties briefs do not focus on the question presented in the writ of certiorari, but ask us to consider whether the contract was enforceable. Thus, we address this question infra. -21- manifested through the Seller s acts, and, at most, the signed contract represented the Seller s counteroffer, as opposed to acceptance, which was not commun icated to the Buyers.12 We hold that the Seller did not accept the contract, and thus it is not enforceable. Creation of a contract requires an offer by one party and acceptance by the othe r par ty. See Bramble. v. Thomas, 396 Md. 443, 455, 914 A.2d 136, 143 (200 7); Buffalo Steel Co. v. Kirwan, 138 M d. 60, 64, 113 A. 628, 630 (1921). A cceptance of an off er is requisite to contract formation , and com mon to all manifestations of acceptance is a demonstration that the parties had an actual meeting of the minds regarding contract formation. See Creel, 354 Md. at 101, 729 A.2d at 398 (reiterating that to establish a contract the minds of the parties must be in agree ment as to its te rms); Pavel v. A.S. Johnson, 342 Md. 143, 162-63, 674 A.2d 521, 531 (1996) (holding that no contract was formed because there was no meeting of the minds). Acceptance may be m anifest ed by acts as well as by wo rds. See, e.g ., Porter v. General Boiler Casing Co., 284 Md. 402, 411, 396 A.2d 1090, 1095 (1979) (determining that summary judgment wa s inappropriate where a material issue of fact existed as to whether a parties conduct clearly manifested an intention to accept and to be bound by the terms of the contract); Chesapeake, Etc. v. Manitowoc, 232 Md. 555, 567, 194 A.2d 624, 630 (1963) (receipt of check finalized a c ontract of sa le); Envelope Co. v. Balto. Post Co., 163 Md. 596, 12 Respondent asserts that, in crossing out paragraphs 20 and 21 o f the contra ct, she converted the docum ent into a counteroffer. Because of our holding, we need not determine whether the changes made by resp ondent to the contract and addenda would have required further asse nt from the Buyers in ord er to comp lete formatio n of the co ntract. -22- 605, 163 A. 688, 691 (1933) (holding that where plaintiff delivered as per the contract and defendant accepted such items, an acceptance may be indicated by acts as well as by words ). In some cases, we have held that silence or inaction upon receipt of an offer may constitute accep tance, b ut this is th e exce ption an d not th e gene ral rule. See Teamsters v. Corroon Corp., 369 Md. 724, 738 n.3, 802 A.2d 1050, 1058 n.3 (2002) (stating that as a general rule of contract law, silence and inaction upon receipt of an offer do n ot constitute an acceptance of the offer ); cf. GEICO v. Medical Services, 322 Md. 645, 655, 589 A.2d 464, 468-69 (1991) (silence and inaction can operate as an acceptance of an offer in a few limited circumstances). Silence is generally not to be considered an acceptance of an offer unless the parties had agreed previously that silence would be an acceptance, the offeree has taken the benefit of the offer, or because of previous dealing s betwee n the parties, it is reasonab le that the offeree should notify the offe ror if sh e does n ot intend to acce pt. See Attorney Griev. Comm n v. McIntire, 286 Md. 87, 93, 405 A.2d 2 73, 277 (1979 ). See also C ORBIN ON C ONTRACTS, supra at § 3.21, p. 416; Restatement (Second) of Contracts § 69. A common way to communicate acceptance of an offer is th rough the mail. 13 Maryland has long followed the postal acceptance rule for determining when an offer received by mail ha s been a ccepte d. See Lee v . State, 332 Md. 654, 663 n.3, 632 A.2d 1183, 1187 n.3 (1993) (noting that Md. Rule 1-321(a) uses the mailbox rule and stating that the 13 The cover letter enclosed w ith the contract and addenda indicates that the Buyers expected the Seller to respond in a manner that would follow the principles established in the postal acceptanc e rule. The c over letter stat es, [ y]ou can either fax me the contract and disclaim er back or I ll incl ude a F ed-X e nvelop e for you to send back. -23- rule provides that acceptance by mail of an offer is ordinarily effective upon depositing that acceptance in the mailbo x); Reserve Insuranc e v. Duck ett, 249 Md. 108, 117, 238 A.2d 536, 541 (1968) (applying the postal acceptance rule to conclude that an individual had accepted an insurance policy by mailing a money order in time to have it received before expiration of the original in surance p olicy); Wheat v. Cross, 31 M d. 99, 103 (1869) (adopting postal acceptance rule). The p ostal accep tance rule is a principle of the com mon law of contrac ts that basically provid es that accep tance by mail o f an offe r is ordinarily effective upon depositing that acceptance in the mailbox. Lee, 332 Md. at 664 n.3, 632 A.2d at 1187 n.3. We have described the traditional postal acceptance rule as follows: The well establish ed rule is that in the absence of any limitation or provision to the contrary in the offer, the acceptance of the offer is complete and the co ntract beco mes bind ing upon both parties when the offeree deposits the acceptance in the post box. This rule was originally promulgated in the leading case of Adams v. Lindsell, [(1818) 106 E ng. Rep. 250 (K .B.)], and has been generally ado pted by the hig hest courts o f appeal in the United States. This rule was adopted in M aryland by this Court in Wheat v. Cross, 31 M d. 99 (1 869). Reserve Insurance, 249 Md. at 117, 238 A.2d at 541. As stated in the Restatement (Second) of Contracts, an offer is operative and completes the manifestation of mutual assent as soon as put out of the offe ree s possession . Restatem ent (Secon d) of Co ntracts § 63 ; accord 2 W ILLISTON ON C ONTRACTS, supra at § 6:37, p. 395 (stating that an acceptance is dispatched within the meaning of the rule under consideration when it is put out of the possession of the -24- offeree and within the control of the postal authorities, telegraph o perator, or oth er third party authorized to receive it ). In the instant case, the parties stipulated that the [B uyers] were not aware that [Ms. Norkunas] signed (and crossed ou t paragraph s 20 and 2 1 of) the R esidential C ontract of S ale dated March 7, 2004 until a copy of the Contract was produced by [Ms. Norkunas] through discovery in these proceedings (emphasis added). Thus, the Seller did not manifest an assent to the contract in accordance with the postal acce ptance rule because she did not put the contract ou t of her pos session un til production of the con tract was required through discovery. Nor did the Seller manifest her assent through silence. Acceptance through silence is generally not considered acceptance and none of the exceptions to the general rule are presen t in this ca se. See Restatement (Second) of Contracts § 69. Indeed, after receiving the contract, the S eller comm unicated to the Buyers tha t she had reje cted their offer and did not inten d to s ell he r pro perty. The Buyers argue that the Seller accepted the contract merely by signing the docume nt, particularly because of the provisions in Section 48 of the con tract. 14 The Buyers 14 Section 48 of the contract states as follows: ENTIRE AGREEM ENT: This Contract and any Adde nda thereto contain the final and entire a greemen t between the parties, and neither they no r their agents shall be bound by any term s, cond itions, statements, warranties or representations, oral or written , not herein c ontained. T he parties to th is Contract mutually agree that it is binding upon the m, their heirs, executors, administrators, personal re presentative s, successor s and, if perm itted as herein provided, assigns. Once signed, the terms of this Contract can only be changed by a document executed by all parties. This Contract shall be (contin ued...) -25- rely on the language in Section 48 of the contract that states: The parties to this Contract mutually agree that it is binding upon them . . . Once signed, the terms of the Contract can only be ch anged by a docume nt executed by all parties. But Section 48 of the contract also specifies that this Con tract shall be interpreted and construed in accordance with the laws of the State of Maryland. The Bu yers do not cite any supporting authority for their assertion that a docum ent signed in private and never deliv ered or ma nifested by the Seller s acts constitutes an enforc eable con tract. 15 Indeed, under Maryland law, a contract is not formed until there is acceptance. In the case sub judice, the Seller had second thoughts about selling her home and, although she signed portions of the contract, she did not manifest her acceptance by communicating with the Buyers. The Buyers we re unaw are that the co ntract was s igned until discovery occurred, and thus the parties did not have a meeting of the minds regarding the contract. To create a contract, notice of acceptance m ust be commu nicated to the offeror. Signing the contract in private without transmitting the documents or otherwise 14 (...continued) interpreted and construed in accordance with the laws of the State of Maryland. It is further agr eed that this C ontract ma y be executed in counterparts, each of which when considered together shall constitute the origina l Contr act. 15 The Buyer s reliance, for example, on Ray v. Eurice, 201 Md. 115, 93 A.2d 272 (1952) is misplaced. Both parties in Ray manifested acceptance because they signed the contract in the pres ence o f each other. Id. at 118, 93 A.2d at 275. The only question in that case was whether both of the parties had assented to certain building specifications attached to the ag reeme nt. Id. at 122, 93 A.2d at 276. -26- communicating acceptanc e to the Bu yers or their agen t does not cr eate an enf orceable agreement. The Seller s only communication to the Buyers after receipt of their contract offer was that she was no longer selling her property and this constituted a rejection of their offer. We hold that the Seller did not accept the contract, and thus it was not an enforc eable agreeme nt. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. C OSTS TO B E P A I D BY PETITIONERS. -27-

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