Starlite Limited Partnership v. Landry’s Restaurants, Inc.

Brief Fact Summary.

Plaintiff sued Defendant for payment based on Defendant’s guaranty of a lease of Plaintiff’s property. The trial court granted Plaintiff’s motion for summary judgment. Defendant appealed.

Synopsis of Rule of Law.

Defective acceptance of an offer may not be waived by performance to create a binding contract.

Facts.

Landry’s Seafood House-Minnesota Inc. (Seafood House) provided an offer to Starlite Limited Partnership (Plaintiff) for a twenty-year lease of property owned by Plaintiff. The offer stated that it would be deemed withdrawn and of no effect if Plaintiff did not sign and return a copy of the lease by a certain deadline. In anticipation of Plaintiff’s acceptance of the lease offer, Seafood House’s parent corporation, Landry’s Restaurants, Inc. (Defendant) issued a written guaranty of Seafood House’s lease. Plaintiff signed and returned a copy of the lease after the deadline stated in the offer. Seafood House occupied the property and paid rent for several years, but then stopped paying rent and vacated the property. Plaintiff sued Defendant’s for payment, based on Defendant’s guaranty. The district court granted summary judgment for Plaintiff, finding that Seafood House waived the deadline for acceptance of the offer by occupying the property and paying rent, and entered a judgment for damages in favor of Plaintiff. Defendant’s appealed, arguing that a term of acceptance may not be waived by a party’s performance under the contract.

Issue.

Whether defective acceptance of an offer may be waived by performance to create a binding contract.

Held.

No. The trial court’s ruling is reversed and the case is remanded for further proceedings. Defective acceptance of an offer may not be waived by performance to create a binding contract.

Discussion.

The rules for contract formation are different from the rules of contract performance. While a party may waive a term of contract performance, under Minnesota law a party may not waive a term of acceptance of a contract. If an offer specifies a deadline for acceptance, the deadline may not be waived, and any acceptance of the offer after the deadline does not create a valid contract. To hold otherwise could create a situation where an offeree submitting a late acceptance might not know whether the offeror had chosen to waive the offer deadline or whether a contract had been formed. Although Plaintiff’s late acceptance of the lease offer might be considered a counteroffer that was accepted, that is a question for the district court.