Motel Services, Inc. v. Central Maine Power Co.

Brief Fact Summary.

A power company was offering an allowance to those individuals or companies that own a new or existing home "built for or converted to the use of electricity as the primary method of heating."  A builder sought to collect the allowance, but the power company instead paid the owner of the building after its construction.

Synopsis of Rule of Law.

Although the general rule is that "contracts are presumed to be bilateral" this is a rebuttable presumption.

Facts.

On August 5, 1971, the Appellant, Motel Service, Inc. (the "Appellant"), agreed to build two housing projects for the Waterville Housing Authority ("WHA").  The Appellant agreed to do so on a "turnkey" basis.  After the agreements effective date, the Appellant wanted to change the heating system from an oil system to an electrical system.  The Appellant wished to do so because it wished to qualify for a promotional allowance the Appellee, Central Maine Power Co. (the "Appellee") was offering.  The allowance applied to the:  "Owner of a home either new or existing which is initially built for or converted to the use of electricity as the primary method of heating . . . , provided that the installation of such electric heating equipment complies with the Company's 'Standard Requirement Electric Service and Meter Installation' And 'Standards of Insulation For Use with Electric House Heating.' "
•    The WHA and HUD were not aware of the potential allowance.  The modifications in the heating system were approved by the WHA and the Federal Department of Housing and Urban Development ("HUD").  The Appellant agreed to perform its obligation under the contract for $16,000 less if the change from oil to electric was approved.  The allowance allowed the Appellant to offer this discount.  The premises were conveyed to WHA after the electric systems were completely installed, but before all the Appellee's "Standards" were satisfied.  The "Standards" were eventually fully complied with.  An employee of the Appellee sent the forms pertaining to the allowance to the WHA instead of the Appellant.  The WHA owned the project on the day it was completed.  The Appellant brought this suit against the Appellee and argued it was entitled to the allowance.  The lower court found "that appellant had not fully complied with the requirements of the allowance policy prior to conveyance of the property."  As such, "CMP's policy was a standing offer to enter into a unilateral contract" and "appellant did not fully perform prior to relinquishing ownership, and no enforceable contract was therefore produced."  The lower court also concluded that WHA was not entitled to the allowance.

Issue.

Is there a valid unilateral contract?
•    Did the Appellant completely perform the unilateral contract?

Held.

Yes.  "CMP's marketing policy was an offer to enter into a unilateral contract."  This is the case because "the clear import of the offer, [   ] requested not a promise to perform, but complete performance in accordance with its terms."
•    Yes.  First, "[w]here the offeree of a unilateral contract is prevented from completing performance by the actions of the offeror, such failure will not be a defense to an action by the offeree on the contract."  Here, the Appellee sent the forms to claim the allowance to WHA not the Appellant.  Second, "[t]he failure of appellant to maintain his 'owner' status through the period of completion of work does not, we think, preclude recovery."  The court believed the "plain reading of the offer leads to the conclusion that the class of offerees consisted of owners of homes who undertook to install electrical heating equipment. No conditions are attached to the offer plainly indicating a requirement that the owner occupy the home and use the system after installation."

Discussion.

This case offers an interesting discussion of the rules surrounding unilateral contracts.