Supreme Court of Texas
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No. 19-0793
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Virginia Angel, Trustee for the Gobsmack Gift Trust, as Assignee
of South State Bank, and South State Bank, N.A.,
Petitioners,
v.
Kyle Tauch,
Respondent
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On Petition for Review from the
Court of Appeals for the Fourteenth District of Texas
═══════════════════════════════════════
Argued September 15, 2021
JUSTICE DEVINE delivered the opinion of the Court.
Justice Lehrmann did not participate in the decision.
Offer and acceptance are essential elements of a valid and binding
contract. As a matter of blackletter law, an offer empowers the offeree
to seal the bargain by accepting the offer. 1 But equally well-established
is the rule that acceptance is ineffective to form a binding contract if the
1 RESTATEMENT (SECOND) OF CONTRACTS §§ 35, 36 (Am. Law Inst.
1981).
power of acceptance has been terminated, such as by the offeror’s
revocation before acceptance. 2 The main issue in this contract dispute
is whether a purported offer to settle a debt for a reduced sum was
accepted before it was revoked. Resolution of that issue turns on the
parameters of the recognized, but rarely implicated, doctrine of implied
revocation.
In the mid-twentieth century, we adopted the implied-revocation
doctrine in Antwine v. Reed, which held that an outstanding offer for the
sale of land was revoked when the offeree learned that the offeror had
engaged in “some act inconsistent” with the offer. 3 Since then, the
doctrine has never again been invoked in this Court, and questions exist
about whether and how it applies beyond the facts of the seminal case.
Here, the parties dispute whether the implied-revocation doctrine (1) is
limited to offers involving the sale of land, (2) applies if the offeree learns
about the offeror’s inconsistent act from someone other than the offeror,
and (3) is satisfied under the undisputed facts in this case. We hold that
the doctrine is not constrained to real-property transactions and the
settlement offer was impliedly revoked when the offeror assigned the
underlying judgment to a third party for collection and the assignee gave
the offeree a copy of the assignment agreement before he accepted the
settlement offer. We therefore reverse the court of appeals’ judgment
and render judgment that no contract to settle the debt was formed.
2 Id. § 36.
3 199 S.W.2d 482, 485 (Tex. 1947).
2
I. Background
In 2015, South State Bank (the Bank) domesticated a South
Carolina judgment against Kyle Tauch for $4,635,877 plus interest.
Subsequently, the Bank’s senior vice president, James Holden, and
Tauch began negotiating to settle the debt. Following a series of email
exchanges over many months, Tauch offered the Bank $1 million to
purchase the judgment.
With the debt having grown to more than $6 million, Holden
responded to Tauch by email on April 11, 2016, rejecting his offer:
I received word late Friday afternoon that the bank will not
be able to accept your offer to sell your note/judgment or
take a discounted settlement for the outright release price
of $1M that you had offered. To assist you in
understanding what amount the bank would be able to
accept, I did ask for a counter figure and received authority
to release your judgment for net proceeds of $2,000,000
which is still over a 50% discount. If you find that you and
your investors can make this happen, please let me know
as quickly as possible as the bank will likely be look[ing] at
other collection alternatives.
Tauch did not immediately respond to the email.
As Holden’s email implied, but unbeknownst to Tauch, the Bank
was simultaneously pursuing alternative collection methods with
another of Tauch’s judgment creditors, Virginia Angel, trustee of The
Gobsmack Gift Trust (Angel). 4 In an unrelated garnishment proceeding,
Angel had secured a temporary restraining order prohibiting Tauch
4 When negotiations commenced, the trust held a $613,541.46 judgment
against Tauch that had been reduced to around $575,000 through its collection
efforts.
3
from transferring, using, or disposing of funds held in several bank
accounts and assets held in his name. In light of Angel’s successes in
locating, identifying, and freezing Tauch’s assets, the Bank sought a
strategic alliance with Angel to facilitate recovery on its own judgment.
On April 13, having received no response from Tauch, Holden
executed, on the Bank’s behalf, an agreement assigning the judgment to
Angel for collection. As consideration for the assignment, the Bank
would receive the first $3 million collected on the judgment with Angel
retaining any additional sums collected. The agreement, which bore an
April 14, 2016 effective date, 5 also included the following terms:
In consideration of the substantial efforts by [Angel]
to locate and identify assets of Tauch and to obtain the
temporary restraining order, [the Bank] agrees to assign
its judgment to [Angel] in accordance with the terms and
conditions of this Agreement.
Covenants and Agreements
1. [The Bank] assigns to [Angel] the [Bank’s
judgment] for purposes of collection.
2. The [Bank’s] Judgment is transferred
WITHOUT RECOURSE, REPRESENTATION OR ANY
WARRANTY, EITHER EXPRESS OR IMPLIED, except as
expressly set forth in paragraph 5 below.
3. [The Bank] hereby consents and grants
permission to [Angel’s] law firm . . . to take any and all
necessary and appropriate steps to collect the [Bank’s]
5 Angel and the Bank subsequently signed a “Clarification of
Assignment,” which “clarified” that the parties intended the effective date to
be April 13—the day the agreement was signed—not April 14. The clarified
effective date is immaterial to our analysis.
4
Judgment . . . and hereby waives any potential or actual
conflict of interest that may arise[.]
....
5. [The Bank] warrants and represents to
[Angel] that:
(a) [The Bank] is the present owner and
holder of the [Bank’s] Judgment and has not
transferred or assigned its respective interests
therein;
(b) No payment has been made on the
[Bank’s] Judgment through the date of this
Agreement; and
....
(e) [The Bank] agrees not to institute
collection efforts on its own against Tauch utilizing
or based upon any information obtained from
[Angel] or her counsel.
6. [Angel] shall be fully and completely
subrogated in and to all rights of [the Bank] relating to or
arising from the [Bank’s] Judgment[.]
....
12. Either [Angel] or [the Bank] may terminate
this Agreement at any time upon 45 days’ written notice,
but the confidentiality, non-disclosure and non-use
provisions shall survive termination.
At 4:27 p.m. on April 13—the day both parties signed the
agreement but before its stated effective date—Angel’s attorney sent
Tauch’s attorney an email notifying him about the assignment and
5
demanding payment in full on the judgment. Confirming receipt of that
email, Tauch’s attorney requested documentation of the assignment,
and shortly thereafter, at approximately 5:23 p.m., Angel’s attorney
forwarded a copy of the assignment agreement to him.
Recognizing this assignment as the “other collection alternatives”
Holden had warned him the Bank would likely pursue, Tauch promptly
emailed Holden at 6:12 p.m. on April 13 purporting to accept the
settlement terms stated in Holden’s April 11 email:
I have spoken with my investors and they are OK with your
offer. We agree to the 2 million payment which is a release
and not a purchase. Please send paperwork so I can
review.
Neither Holden nor any other Bank representative had informed
Tauch about the assignment agreement prior to Tauch’s attempted
acceptance. Rather, all communications about the assignment
agreement had come from Angel’s attorney.
Two days later, the Bank’s attorney responded to Tauch’s email:
Please be advised that, prior to its receipt of your email on
Thursday morning, the [B]ank assigned its judgment. I
understand your agent received notice [o]f this fact prior to
your email to Mr. Holden and, based on the terms [of the
assignment], you knew the [B]ank could not release the
judgment when you sent the email.
Tauch denied that the purported settlement offer had been effectively
revoked, insisted that a valid settlement agreement had been formed,
and refused to pay Angel.
On April 25, 2016, Tauch’s counsel acknowledged in a Rule 11
agreement that Angel’s judgment had, at that point, been fully satisfied.
6
Nonetheless, given the percolating dispute over settlement of the Bank’s
judgment, the parties agreed to extend the temporary restraining order
with a modification allowing Tauch to transfer $7 million from his bank
accounts to his attorney’s IOLTA account “to be held in trust for
purposes of either transferring those funds into an escrow account . . .
or paying off the balance of the [Bank’s] judgment.”
Less than a month later, Angel sued Tauch seeking a declaration
that (1) Tauch’s power of acceptance terminated on receipt of the
assignment agreement; (2) Tauch’s April 13 email came too late and was
thus ineffective as an acceptance; (3) Tauch’s April 13 email was not an
acceptance because it lacked essential terms and contemplated further
action; and (4) Tauch owed the full amount of the judgment, plus
interest, to Angel. In a counterclaim, Tauch sued Angel for tortious
interference with a contract and sought a declaration that he had a valid
contract with the Bank to settle the debt for $2 million based on his
acceptance of the Bank’s April 11 offer before the assignment
agreement’s stated effective date. Tauch also filed a third-party claim
against the Bank for breach of contract. The Bank responded with a
counterclaim against Tauch, seeking a declaration that no contract was
formed.
Angel and Tauch filed cross-motions for partial summary
judgment on their declaratory-judgment claims. The trial court granted
Angel’s motion and implicitly denied Tauch’s, concluding that “Tauch
has no binding contract with [the] Bank to compromise and settle the
Judgment” because (1) “Tauch’s power of acceptance terminated by
notice of and Tauch’s receipt of the Assignment from [the Bank] to
Angel” and (2) “[a]s a matter of law, Tauch could not have accepted the
7
offer made by the [Bank].” The court subsequently rendered final
judgment for Angel and the Bank, holding (as the parties had agreed)
that the declaratory-judgment ruling was dispositive of all parties and
claims before the court. The final judgment also conditionally awarded
attorney’s fees to Angel and the Bank and, alternatively, to Tauch
depending on the ultimate success of any appeals.
In a split decision, the court of appeals reversed and remanded. 6
Assuming, without deciding, that the implied-revocation doctrine is not
limited to offers for the sale of the land, the court held that the doctrine’s
“elements are not satisfied under applicable case law or Restatement
sections 42 or 43” because the assignment agreement was not “effective”
before Tauch exercised the power of acceptance. 7 The court explained
that Tauch’s knowledge of the assignment agreement could not have
effected an implied revocation of the Bank’s April 11 settlement offer
because “[t]he fact that the bank entered into an assignment agreement
that would not take effect until April 14 is not an action that would
prevent the bank’s [offer] from materializing into a contract with Tauch
should he accept the proposal before April 14, which he did.” 8 This is so,
the court said, because a “contract signed on April 13 but not effective
until April 14 is no different than a contract signed on April 14 and
6 580 S.W.3d 808, 819 (Tex. App.—Houston [14th Dist.] 2019).
7 Id. at 817 (referring to Angel and the Bank’s reliance on Sections 42
and 43 of the Restatement (Second) of Contracts along with Antwine, 199
S.W.2d at 484, and Kidwell v. Werner, No. 10-05-00274-CV, 2006 WL 3627883,
at *1 (Tex. App.—Waco Dec. 13, 2006, no pet.) (mem. op)).
8 Id.
8
effective at its signing.” 9 Concluding that Tauch still had the power of
acceptance when he purported to accept the April 11 offer, the court held
that Tauch and the Bank had a binding contract to compromise and
settle the judgment for $2 million. 10 The court rendered judgment for
Tauch on his declaratory-judgment claim and, in doing so, rejected
arguments that Holden’s April 11 email was not actually an offer and
Tauch’s April 13 email was substantively inadequate as an
acceptance. 11
In the dissent’s view, the effective date of the agreement between
the Bank and Angel was immaterial to whether the Bank’s execution of
it constituted a revocatory act. 12 The dissent warned that, by focusing
on the effective date, the majority opinion had misstated and misapplied
the implied-revocation doctrine. 13 “[T]he core inquiry,” the dissent
explained, is “whether the Bank took some action inconsistent with the
offer to release the judgment in Tauch’s favor . . . not whether Angel
could enforce the assignment on April 13 or even whether the
assignment had become executory,” which it had. 14
The dissent observed that Antwine had articulated the
implied-revocation doctrine as effecting a revocation whenever the
9 Id.
10 Id. at 817-19.
11 Id. at 813-14, 818-19.
12 Id. at 822 (Frost, C.J., dissenting).
13Id. at 823 (stating that this Court’s implied-revocation standard does
not require “action that would prevent the offer from materializing into a
contract”).
14 Id. at 822-23 (emphasis omitted).
9
offeree acquires “knowledge” that the offeror has taken “some act
inconsistent with the offer.” 15 The dissent further noted that the
outcome in Antwine did not hinge on the existence of any other contract
at all, as the offeree had only been told that the seller had taken the
property off the market. 16 So regardless of “[w]hether the assignment’s
effective date was a day later, a week later, or a month later, agreeing
to assign the judgment to Angel” surpassed the threshold set in Antwine
because it “was an action inconsistent with releasing the judgment in
Tauch’s favor.” 17 Because Antwine did not limit the implied-revocation
doctrine “to any particular genre of cases,” the dissent would have
affirmed the trial court’s judgment because the Bank impliedly revoked
its offer and thereby terminated Tauch’s power of acceptance before he
attempted to accept the offer. 18
On petition for review to this Court, the parties join issue on the
scope and application of the implied-revocation doctrine and other
asserted deficiencies in the requisites to contract formation. Because we
hold that any offer had been impliedly revoked before Tauch accepted,
we do not address the remaining contract-formation issues presented in
the petition for review.
15 Id. at 820-21 (citing Antwine, 199 S.W.2d at 485-86).
16Id. (noting that, in Antwine, an implied revocation occurred where the
offeree had only been informed that the offeror had instructed his agent to take
the property off the market).
17 Id. at 822.
18 Id. at 823.
10
II. Discussion
A. Applicable Standards
“A declaratory judgment granted on a traditional motion for
summary judgment is reviewed de novo.” 19 Summary judgment is
proper when no genuine issue of material fact exists and the movant is
entitled to judgment as a matter of law. 20 “When both sides move for
summary judgment, and the trial court grants one motion and denies
the other, reviewing courts consider both sides’ summary-judgment
evidence, determine all questions presented, and render the judgment
the trial court should have rendered.” 21
Settlement agreements are contracts and are accordingly
governed by contract-law principles. 22 Among the most foundational
doctrines in the Anglo-American legal tradition is that an offer and an
acceptance are two indispensable elements of a binding and enforceable
contract. 23 But acceptance creates a binding contract only if the power
of acceptance remains in the offeree. 24 If an offeror revokes an offer
19 Kachina Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445, 449 (Tex. 2015).
20 Id.
21 Jefferson State Bank v. Lenk, 323 S.W.3d 146, 148 (Tex. 2010)
(internal quotation marks omitted).
22 Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507,
513 (Tex. 2014).
23 RESTATEMENT (SECOND) OF CONTRACTS §§ 17, 22.
24 See Antwine, 199 S.W.2d at 485; RESTATEMENT (SECOND) OF
CONTRACTS § 35 (an offer creates a continuing power of acceptance, but a
contract cannot be created after the power of acceptance has terminated);
1 WILLISTON ON CONTRACTS §§ 5:1 (duration of offer), 5:2 (termination of
power of acceptance) (4th ed. 2019).
11
before acceptance, the offeree’s power of acceptance terminates. 25
Although there are exceptions, 26 most offers are revocable, 27 and all
parties agree that if Holden’s April 11 email to Tauch was an offer at
all, 28 it was revocable.
Typically, a revocation will be communicated directly by the
offeror to the offeree (or by and through agents of either). 29 A “direct
communication” of the offeror’s intention not to proceed with the
contract will terminate the power of acceptance regardless of whether
the retraction is made expressly or is implied from the offeror’s words or
actions. 30 But even when there has been no direct communication from
offeror to offeree, the Restatement (Second) of Contracts recognizes that
25 See Antwine, 199 S.W.2d at 485; RESTATEMENT (SECOND) OF
CONTRACTS § 36(1)(c) (methods of terminating an offeree’s power of acceptance
include “revocation by the offeror”); 1 WILLISTON, supra note 24, § 5:2
(revocation is one of the primary means by which the power of acceptance
created by the offer may terminate).
26 See, e.g., TEX. BUS. & COM. CODE § 2.205 (establishing requisites for
a firm offer with respect to purchase or sale of goods); RESTATEMENT (SECOND)
OF CONTRACTS § 37 (discussing option contracts supported by consideration).
27 RESTATEMENT (SECOND) OF CONTRACTS § 42 cmt. a; see also Bowles
v. Fickas, 167 S.W.2d 741, 743 (Tex. [Comm’n Op.] 1943).
28The court of appeals rejected Angel and the Bank’s argument that the
April 11 email was not an offer but rather an invitation to make an offer, and
that holding has not been challenged in this Court.
29 See Antwine, 199 S.W.2d at 485; RESTATEMENT (SECOND) OF
CONTRACTS §§ 42 (discussing direct communication revocations), 43 cmt. a
(describing a revocation communicated through a person having power to act
for the offeror or offeree as a direct communication revocation governed by
Restatement Section 42, as supplemented by the law of agency).
30Antwine, 199 S.W.2d at 485; RESTATEMENT (SECOND) OF CONTRACTS
§§ 42 cmt. d (“[a]ny clear manifestation of unwillingness to enter the proposed
bargain is sufficient”), illus. 1 & 5, Reporter’s Note cmt. d.
12
an offer may be considered revoked if the offeree receives “reliable
information” that the offeror has taken “definite action inconsistent with
an intention to enter into the proposed contract.” 31 Section 43 of the
Restatement refers to this as an “indirect communication of revocation”
and states that the rule is an extension of “the principle [in Section 42]
giving effect to a revocation communicated directly by the offeror to the
offeree” and is “subject to the same qualifications.” 32
Although the offeror’s actions may imply a revocation that has not
been communicated in express words, 33 the revocation will not be
effective unless the offeree has knowledge of those actions. 34 Notice is
31 RESTATEMENT (SECOND) OF CONTRACTS § 43.
32 Id. § 43 cmt. a (describing Section 43’s “indirect communication of
revocation” rule as an extension of “the principle giving effect to a revocation
communicated directly by the offeror to the offeree” that “is subject to the same
qualifications”); see also 1 WILLISTON, supra note 24, § 5:10 (“It is now
generally well settled that an offer may be revoked under some circumstances
at least by knowledge on the part of an offeree that the offeror is no longer
going to enter into such a contract as was proposed by the offer, although that
knowledge comes not from the offeror or with his or her awareness, but through
other channels.”).
33The Second Restatement identifies Dickinson v. Dodds, 2 Ch. Div. 463
(1876), as a source for illustrations describing revocations implied by conduct
in both Section 42, concerning direct communications, and Section 43,
concerning indirect communications. See RESTATEMENT (SECOND) OF
CONTRACTS §§ 42 Reporter’s Note cmt. d, 43 Reporter’s Note cmts. b & c.
Dickinson is “[t]he leading case” for indirect communication of an implied
revocation. 1 WILLISTON, supra note 24, § 5:10.
34RESTATEMENT (SECOND) OF CONTRACTS §§ 42 cmt. b (emphasizing
necessity that communication be received), 43 (requiring the offeror’s
knowledge of revocatory action); 1 WILLISTON, supra note 24, §§ 5:9 (“[T]he law
of contracts ordinarily insists upon an objective rather than a subjective
determination of whether mutual assent exists. Therefore, ordinarily it is
necessary for the offeror to communicate the revocation of an offer to the
13
essential. Because an offeror’s manifestations of intent are viewed
under an objective standard, 35 the offeror’s words and actions directly
communicated to the offeree are reliable indicators of the intent so
manifested. 36 But if the same information comes to the offeree
indirectly, the comments to Section 43 state that a revocation does not
become effective unless a reasonable person acting in good faith would
believe the information. 37 Thus, “if the offeree disbelieves [a rumor] and
is reasonable in doing so,” the power of acceptance is not terminated
“even though the rumor is later verified.” 38
Nearly 75 years ago, Antwine v. Reed set the standard in this
state for an implied revocation directly communicated to the offeree.
There, we approvingly quoted a compendium for the proposition that an
offeree’s knowledge that the offeror has undertaken “some act
inconsistent” with an outstanding offer is sufficient to revoke the offer
and “prevent an acceptance from changing into a binding contract.” 39
We then held that the power of acceptance had terminated when a
putative real estate purchaser learned from the seller’s real estate
offeree.”), 5:10 (recognizing that an offer may be revoked when the offeree’s
knowledge that the offeror is no longer minded to enter into the proposed
transaction comes through channels other than the offeror).
35 RESTATEMENT (SECOND) OF CONTRACTS § 42 cmt. b (“[T]he offeree is
justified in relying on the offeror’s manifested intention regardless of any
undisclosed change in the offeror’s state of mind.”).
36 Compare id. § 42, with id. § 43.
37 Id. § 43 cmt. d.
38 Id.
39 Antwine, 199 S.W.2d at 485 (quoting 17 C.J.S. Contracts, § 50d).
14
broker that the seller had directed the broker to take the property off
the market. 40 Antwine is a direct-communication case involving a
revocation implied by actions showing that the offeror had changed its
mind. 41 Antwine is our first and last word on implied revocation of an
offer, so we have yet to consider an offeror’s inconsistent conduct the
offeree learns about indirectly. Disputes involving indirect
communication of revocatory conduct are said to “arise[] infrequently,” 42
and the near total jurisprudential silence on the implied-revocation topic
since Antwine’s issuance appears to bear that out.
Here, all parties agree that this is not an express-revocation case
because the Bank did not, by any words, retract its offer before Tauch’s
purported acceptance. All parties also agree that this is not a
40 Id. at 485-86.
41See id. at 485 (citing authority including the Restatement (First) of
Contracts Section 41—the predecessor to Section 42 of the Second
Restatement—which said “Revocation of an offer may be made by a
communication from the offeror received by the offeree which states or implies
that the offeror no longer intends to enter into the proposed contract, if the
communication is received by the offeree before he has exercised his power of
creating a contract by acceptance of the offer”).
42 1 WILLISTON, supra note 24, § 5:10. Texas intermediate court cases
involving implied revocations acknowledge that such conduct may be
communicated directly or indirectly without clearly involving communications
of an indirect nature. See Wal-Mart Stores Tex. LLC v. Shirey, No.
14-18-00545-CV, 2020 WL 548323, at *5 (Tex. App.—Houston [14th Dist.] Feb.
4, 2020, no pet.) (mem. op.) (holding that the trial court’s granting of summary
judgment was not revocatory conduct by the offeror and the offer did not specify
it would be revoked if that event occurred); Kidwell v. Werner,
No. 10-05-00274-CV, 2006 WL 3627883, at *3 (Tex. App.—Waco Dec. 13, 2006,
no pet.) (mem. op) (finding some evidence of direct implied revocation);
Valencia v. Garza, 765 S.W.2d 893, 896-97 (Tex. App.—San Antonio 1989, no
writ) (mentioning revocations by direct and indirect communications without
clearly articulating the case as falling under one or the other).
15
direct-communication case because Tauch learned about the assignment
agreement from Angel’s counsel, not the Bank, and neither Angel nor
her attorney is alleged to have been acting as the Bank’s agent on
April 13 when counsel demanded payment on the judgment and
forwarded the assignment agreement to Tauch’s attorney. 43 The crux of
the parties’ dispute—and the dispositive issues—are whether the
Bank’s conduct in executing the assignment agreement with Angel
impliedly revoked the April 11 settlement offer to Tauch and whether
that information was communicated to Tauch in a legally cognizable
manner before his purported acceptance.
B. Implied-Revocation Doctrine
1. Parties’ Arguments
Angel 44 asserts that the Bank’s consummation of a deal to collect
$3 million on the judgment met the standard for an implied revocation
under both Antwine and the Restatement (Second) of Contracts because
(1) execution of the assignment agreement was a definite and
unequivocal action inconsistent with an intent to settle and release the
debt for $2 million and (2) Tauch acquired reliable information about
43The assignment agreement arguably created an agency relationship
between Angel’s counsel and the Bank by virtue of a provision granting the
Bank’s consent and permission for Angel’s law firm “to take any and all
necessary and appropriate steps to collect the [Bank’s] Judgment.” Angel and
the Bank do not claim an agency relationship with respect to the April 13
communications and state the contrary in briefing. To the extent the
assignment created an agency relationship, which we do not consider, it would
not have done so until the contract’s stated effective date of April 14.
44 Angel and the Bank are aligned in this proceeding and have filed joint
briefing. Accordingly, in discussing the arguments on appeal, we refer to them
collectively as Angel for convenience.
16
the Bank’s inconsistent action no later than when he had the
assignment agreement in hand. With both a clear manifestation of
intent not to move forward with the settlement offer and Tauch’s
knowledge about the same, Angel contends that Tauch’s power of
acceptance terminated before he exercised it. Echoing the dissenting
opinion below, Angel maintains that the contract’s effective date does
not compel a different result because the decisive criterion is
inconsistency coupled with the offeree’s knowledge of the inconsistency,
both of which are satisfied on the undisputed facts here.
Tauch takes the position that (1) Texas does not recognize the
implied-revocation doctrine; (2) even if it does, the doctrine only applies
to offers for the sale or purchase of land; (3) if the doctrine is not limited
to the real-estate context, the undisputed evidence negates an implied
revocation because the assignment agreement’s terms were not
unequivocally inconsistent with the Bank’s April 11 settlement offer;
and (4) even if the Bank took inconsistent action, a reasonable person
would not consider a third-party competitor’s claims about the Bank’s
actions to be reliable enough to confer knowledge sufficient to effect a
revocation. We reject Tauch’s arguments.
Revocation by inconsistent action is firmly rooted in contract law
without limitation to any specific contractual context. The touchstone
of the doctrine is inconsistency, and that standard is met here. As
explained below, the Bank’s action in assigning the judgment to Angel
for collection is, in the words of Antwine, “some act inconsistent” with
the settlement offer 45 and, in the words of Sections 42 and 43 of the
45 199 S.W.2d at 485.
17
Restatement, a definite action inconsistent with an intention to enter
the proposed settlement transaction. 46 The court of appeals’ suggestion
that only a presently enforceable contract would suffice is at odds with
extant jurisprudence and learned treatises. While such a circumstance,
if known to the offeree, would undoubtedly be sufficient to terminate the
power of acceptance, our opinion in Antwine establishes that actions
other than a preclusive alternative contract can suffice. Finally,
although no revocation—express or implied—can be effective absent the
offeree’s knowledge of any such manifestation of intent, Tauch’s receipt
of the assignment agreement constitutes such notice. The assignment’s
transmission to Tauch by a third party—even one who is a competitor
for the judgment—does not render it unreliable as a manifestation of
revocatory intent where there is neither evidence nor argument
impugning the assignment’s authenticity. Whether a reasonable person
would find statements made by Angel’s counsel reliable or not, the
document speaks for itself. In arguing that Texas has never recognized
implied revocation, Tauch conflates indirect communication with
implied revocation. A revocation implied by the offeror’s actions may be
46RESTATEMENT (SECOND) OF CONTRACTS §§ 42 cmt. d (offeror need not
expressly “revoke” an offer “[b]ut equivocal language may not be sufficient”),
43 & cmt. d (recognizing a valid revocation “when the offeror takes definite
action inconsistent with an intention to enter into the proposed contract” but
not when “the offeror takes no action or takes equivocal action”). But see
1 WILLISTON, supra note 24, § 5:8 (stating that “equivocal or inexplicit
language . . . may not be sufficient to operate as a revocation [and whether it
does] will ordinarily be a question of fact, depending upon what a reasonable
person in the position of the offeree would have thought” but citing a case
where the only fact issues concerned actual satisfaction of conditions precedent
and whether the offeree had knowledge before acceptance that the offeror had
contracted with another party to sell the same property).
18
communicated either directly from the offeror to the offeree, as Antwine
affirms, or through other channels if the information about the offeror’s
actions is objectively reliable.
2. Doctrinal Applicability
The implied-revocation doctrine dates at least as far back as the
classic English contracts case of Dickinson v. Dodds, 47 which recognized
that an offer need not be expressly withdrawn or retracted to terminate
the power of acceptance. 48 There, an offer to sell improved real property
was outstanding with a stated expiration date that had not yet come to
pass when the putative buyer learned from his agent that the putative
seller had offered or agreed to sell the property to someone else. 49 How
the agent had acquired this information was not disclosed, 50 but on
learning about this development, the buyer promptly hand-delivered his
written acceptance to the seller’s abode and attempted to serve him with
a duplicate as he entered a railway carriage. 51 Through these actions,
the buyer endeavored to communicate his acceptance before the offer’s
stated expiration date. 52 When approached, the seller declined to take
47 2 Ch. Div. 463 (1876).
48 Id. at 472.
49 Id. at 464.
50 Id. at 474 (“Then [the buyer] is informed by [his agent] that the
property has been sold by [the seller to a third party]. [The agent] does not tell
us from whom he heard it, but he says that he did hear it, that he knew it, and
that he informed [the buyer] of it.”).
51 Id. at 464.
52 Id.
19
the written acceptance, declaring: “You are too late. I have sold the
property.” 53
In adjudging the offer terminated before acceptance, Lord Justice
James of the Court of Appeal in Chancery observed, “[T]here is neither
principle nor authority for the proposition that there must be an express
and actual withdrawal of the offer, or what is called a retractation.” 54
And while “one man is bound in some way or other to let the other man
know that his mind with regard to the offer has been changed, . . . in
this case, beyond all question, the [buyer] knew that [the seller] was no
longer minded to sell the property to him as plainly and clearly as if [the
seller] had told him in so many words, ‘I withdraw the offer.’” 55 The
buyer, “knowing all the while that [the seller] had entirely changed his
mind,” no longer had the power to accept the offer and no binding
contract had come into being. 56 The Restatement recognizes Dickinson
as a case involving indirect communication of revocation under
Section 43. 57 Williston on Contracts describes Dickinson as “[t]he
leading case” on indirect communication of revocation and notes that it
“has generally been followed in the United States.” 58
Although Dickinson involved an offer to sell real property, the
opinion does not suggest that the rule of implied revocation is limited to
53 Id.
54 Id. at 472.
55 Id.
56 Id. at 473.
57 RESTATEMENT (SECOND) OF CONTRACTS § 43, Reporter’s Note cmt. b.
58 1 WILLISTON, supra note 24, § 5:10.
20
that context. Rather, the analysis was rooted in the necessity of a
meeting of the minds to form a binding contract. 59 To illustrate the
point, Lord Justice Mellish, in announcing his agreement with the
judgment, provided an example involving an offer to sell a particular
horse where the offeror had, the next day, sold the horse to someone
else. 60 Lord Justice Mellish found it “simply absurd” that if the offeree
knows that the offeror “has sold the property to someone else, and that,
in fact, he has not remained in the same mind to sell it to him, [that] he
can be at liberty to accept the offer and thereby make a binding
contract[.]” 61 Dickinson imposes no express constraint on the
implied-revocation doctrine’s application to real-estate transactions,
and one cannot reasonably be inferred.
The same is true for Antwine. There, a bank had listed a parcel
of land for sale with a real-estate broker. 62 The putative buyer, Reed,
had authorized the bank’s broker to make an offer to purchase the land
on his behalf. 63 The bank, in turn, made Reed a written, signed
counteroffer, which conditioned acceptance on an earnest-money
deposit. 64 Before Reed had accepted the counteroffer by depositing the
earnest money (an express condition of acceptance), the bank instructed
59 Dickinson, 2 Ch. Div. at 473-75.
60 Id. at 474-75.
61 Id. at 474.
62 Antwine, 199 S.W.2d at 483-84.
63 Id. at 484.
64 Id.
21
the broker to take the property off the market. 65 After learning about
the bank’s instruction from the broker, Reed attempted to accept the
counteroffer by depositing the earnest money. 66 After articulating the
principle that “‘[f]ormal notice [of revocation] . . . is not always
necessary, it being sufficient that the person making the offer does some
act inconsistent with it,’” 67 we held that Reed’s power of acceptance
terminated when the broker told him that the bank had directed him to
take the property off the market:
According to the evidence the broker communicated with
Reed concerning the transaction on or about the 27th or
28th of December, 1944, and advised Reed that the bank
had directed him to take the land off the market.
....
Thus it appears from the evidence offered by Reed that the
proposal of the bank was never accepted in all of its terms
by Reed until after Reed was advised of the bank’s
instructions to the broker to take the land off the market.
Under the evidence stated and the authorities cited we
hold that Reed had received notice of the bank’s revocation
of the proposed written contract before he had accepted it
in all of its terms. Accordingly, there was no contract to
sell the land between the parties. 68
Like Dickinson, Antwine is a real-estate case. And also like
Dickinson, it erects no barrier to the implied-revocation doctrine’s
65 Id. at 486.
66 Id.
67 Id. at 485 (emphasis added) (quoting 17 C.J.S. Contracts § 50d).
68 Id. at 485-86 (recitation of the broker’s trial testimony omitted).
22
application to contracts generally. Not by word or by analytical
underpinning. In fact, it seems that no jurisdiction has limited the
doctrine to offers involving the sale of land, and to the contrary, many
have applied it outside of that context. 69 For its part, the Restatement
69 See USHealth Grp., Inc. v. South, 636 F. App’x 194, 202-03 (5th Cir.
2015) (holding that no agreement to arbitrate was formed where the purported
offeree “did not accept the offer” before the purported offeror impliedly
“revoked any offer that could have existed” by filing suit (citing Antwine, 199
S.W.2d at 485)); Varney Ent. Grp., Inc. v. Avon Plastics, Inc., 275 Cal. Rptr. 3d
394, 403 (Ct. App. 2021) (holding that a settlement offer was impliedly revoked
by the offeror’s inconsistent offer to enter into a stipulated judgment (citing
RESTATEMENT (SECOND) OF CONTRACTS § 43)); Lasco v. Town of Winfield, 204
CV-467-PPS, 2007 WL 2349685, at *3 (N.D. Ind. Aug. 14, 2007) (holding that
parties impliedly revoked their settlement offer prior to acceptance; although
they never used words such as “withdrawn, revoked, or rescinded,” “the[] facts
clearly demonstrate[d] that . . . Plaintiffs manifested their unwillingness to
enter into the[] proposed settlement agreement”); see also Trs. of Teamsters
Union Local No. 142 Pension Tr. Fund v. McAllister, Inc., 602 F. Supp. 2d 948,
955 (N.D. Ind. 2009) (noting, in analyzing whether the parties had a valid
settlement agreement, that “[a]ny act or communication that would cause a
reasonable person to believe that an offer has been withdrawn or revoked is
sufficient to constitute a withdrawal or revocation of the offer (no specific words
or magic words are necessary)” (citing 1 WILLISTON, supra note 24, § 5:8));
Gabriel v. Alaska Elec. Pension Fund, 3:06-CV-00192-TMB, 2008 WL
11284863, at *9 (D. Alaska Sept. 30, 2008), aff’d, 773 F.3d 945 (9th Cir. 2014)
(citing RESTATEMENT (SECOND) OF CONTRACTS § 43 and holding offer to
reinstate pension benefits was impliedly revoked by subsequent letter
indicating offeror’s determination that offeree was never entitled to benefits);
Abrams-Rodkey v. Summit Cnty. Child. Serv., 836 N.E.2d 1, 7 (Ohio Ct. App.
2005) (“A subsequent, inconsistent offer revokes an earlier offer. Thus, even if
we find that the statement was intended to apply to all offers between SCCS
and the union, a later, inconsistent offer—in this case, the offer to continue
working—revokes the earlier offer.” (citations omitted)); Palmer v. Schindler
Elevator Corp., 133 Cal. Rptr. 2d 339, 342 (Ct. App. 2003) (holding initial
settlement offer was revoked by subsequent offer); Wilson v. Sand Mountain
Funeral Home, Inc., 739 So. 2d 1123, 1125 (Ala. Civ. App. 1999) (holding that
an offer to buy stock was impliedly revoked by the offeror’s service of a lawsuit
on the offeree); Norca Corp. v. Tokheim Corp., 227 A.D.2d 458, 458-59 (N.Y.
App. Div. 1996) (holding that a subsequent offer to sell fuel pumps for a
23
acknowledges that the rule recognizing an indirect communication of an
implied revocation “has been applied most frequently to offers for the
sale of an interest in land,” while simultaneously observing that the
rule’s animating principles are “equally applicable [but not limited] to
offers to sell other specific property[.]” 70 We decline Tauch’s invitation
to limit the implied-revocation doctrine’s application to certain
transactions because no principle or authority supports doing so. 71 To
the contrary, the necessity of a meeting of the minds is integral to the
formation of any binding contract. 72
different price impliedly revoked a prior offer); Petterson v. Pattberg, 161 N.E.
428, 429-30 (N.Y. 1928) (holding that an offer to settle existing mortgage at a
discount with a lump-sum payment was revoked when the mortgagee sold the
note to a third party and informed the principal about that transaction (citing
Dickinson v. Dodds, 2 Ch. Div. 463 (1876))).
70 RESTATEMENT (SECOND) OF CONTRACTS § 43 cmt. b; see 1 WILLISTON,
supra note 24, § 5:10 (“The reported cases invariably involve land, though
neither Restatement [First or Second] limits the application of the rule to offers
to sell land.”); RESTATEMENT (FIRST) OF CONTRACTS § 42 (AM. LAW INST. 1931)
(“Where an offer is for the sale of an interest in land or in other things, if the
offeror, after making the offer, sells or contracts to sell the interest to another
person, and the offeree acquires reliable information of that fact, before he has
exercised his power of creating a contract by acceptance of the offer, the offer
is revoked.” (emphasis added)).
71 Tauch’s only authority for a contrary proposition, Winrow v. Discovery
Ins. Co., No. COA06-1681, 2008 WL 565678, at *5 (N.C. Ct. App. 2008), cannot
be read as proscriptively as he suggests. In that case, the court noted the
absence of any North Carolina authority applying Dickinson’s rule outside the
real-estate context and “decline[d] to extend” the rule “on the[] facts” of that
particular case where the court had already determined that, as a threshold
matter, there “was not a sufficiently definite action to revoke the [settlement]
offer.” Id.
See David J. Sacks, PC v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (“A
72
meeting of the minds is necessary to form a binding contract.”).
24
That being the case, we turn now to the two essential components
for a valid implied revocation: (1) inconsistent action and
(2) communication. Both are in dispute here. The court of appeals
disposed of the case on the ground that the Bank’s conduct in executing
the assignment agreement did not imply a revocation, so the court did
not consider whether the method by which Tauch learned about it was
sufficient to terminate the power of acceptance.
3. Action Inconsistent with Intent
In Antwine, the Court recognized the principle that the power of
acceptance terminates when the offeree has knowledge that the offeror
has undertaken “some act inconsistent” with the offer. 73 The opinion
does not elaborate further. Sections 42 and 43 of the Restatement are
comparatively more specific in requiring the offeror’s actions to be
definite and clearly inconsistent with an intent to proceed with the
proposed bargain. 74 In describing “what constitutes a revocation,”
Section 42 states that “[a]ny clear manifestation of unwillingness to
enter into the proposed bargain is sufficient. Thus a statement that
property offered for sale has been otherwise disposed of is a
revocation.” 75 But objectively “equivocal” language may be insufficient
73 Antwine, 199 S.W.2d at 485.
74 RESTATEMENT (SECOND) OF CONTRACTS §§ 42, 43.
75Id. § 42 cmt. d; see, e.g., Normile v. Miller, 326 S.E.2d 11, 18 (N.C.
1985) (“In this case, plaintiff-appellants received notice of the offeror’s
revocation of the counteroffer in the afternoon of August 5, when Byer saw
Normile and told him, ‘[Y]ou snooze, you lose; the property has been sold.’”);
Bancroft v. Martin, 109 So. 859, 860 (Miss. 1926) (“The contract for the sale of
the land entered into by the Martins with Rennyson and Passera, which came
to the knowledge of the appellant before he attempted to accept the Martins’
25
to effect a revocation 76 or may create a fact issue about “what a
reasonable person in the position of the offeree would have thought.” 77
offer of sale, constituted a revocation thereof.”); Wm. Weisman Realty Co. v.
Cohen, 195 N.W. 898, 899 (Minn. 1923) (“We think that such offer, based upon
no consideration, is revoked by a sale with notice.”); Watters v. Lincoln, 135
N.W. 712, 715 (S.D. 1912) (“[P]laintiff should not be permitted to recover in
this action for the reason that prior to the time he sent his night message of
acceptance he was aware of the fact that defendant had sold and disposed of
the land in question, thereby making it impossible for defendant to make a sale
thereof to plaintiff.”); Thurber v. Smith, 54 A. 790, 791 (R.I. 1903) (“The fact of
a sale would show that the person giving the notice no longer had the power to
carry out the offer. If such was not the purpose of the notice, it would be
meaningless. We think that its purpose and effect was a revocation of the
defendant’s offer.”).
76 RESTATEMENT (SECOND) OF CONTRACTS § 42 cmt. d (stating that
equivocal language “may not be sufficient”). Compare Bovino v. Amazon.com,
Inc., No. 13-CV-02111-MSK-MJW, 2015 WL 13612169, at *2 (D. Colo. Sept. 15,
2015) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 42 illus. 4 (offeror’s
statement did not effect a revocation where it was “equivocal enough to suggest
that the proposed bargain may yet be entered into”), with Hoover Motor
Express Co. v. Clements Paper Co., 241 S.W.2d 851, 853 (Tenn. 1951) (offer
revoked where offeror’s agent informed offeree that “he didn’t think they were
going through with the proposal. . . . That they had other plans in mind and he
would let me know. He was not sure if he was going through with the original
proposition.”), and RESTATEMENT (SECOND) OF CONTRACTS § 42 illus. 5 (offer
is revoked where offeror informs offeree “Well, I don’t know if we are ready.
We have not decided, we might not want to go through with it.”).
77 1 WILLISTON, supra note 24, § 5:8 (“[I]f the offeror uses equivocal or
inexplicit language, it may not be sufficient to operate as a revocation.
Whether it has that effect will ordinarily be a question of fact, depending upon
what a reasonable person in the position of the offeree would have thought.”
(citing Stone Mountain Props., Ltd. v. Helmer, 229 S.E.2d 779 (Ga. Ct. App.
1976), which held that whether the offeree knew that the property had been
sold was a fact question, and other cases where no fact issue existed and
revocation was determined as a matter of law)); cf. BPX Operating Co. v.
Strickhausen, 629 S.W.3d 189, 198, 202-03 (Tex. 2021) (applying an
“unequivocally inconsistent” test with respect to implied ratification contrary
to the express terms of the parties’ existing contract and finding a fact issue
26
Section 43 similarly gives effect to “definite” action inconsistent with an
intent to proceed with the offer, explaining that the rule “does not apply
to cases where the offeror takes no action or takes equivocal action.” 78
Examples of actions that are insufficient to revoke a prior offer are said
to include “mere negotiations with a third person”; “a definite offer to a
second offeree” that is consistent with an intent to honor the outstanding
offer; and “[e]ven a binding contract with a third person [made]
expressly subject to any rights arising under the outstanding offer.” 79
The implied-revocation standard quoted in Antwine is not stated in such
terms, but there, the offeror’s actions (as reported to the offeree) would
satisfy the Restatement’s formulation because taking property off the
about intent to alter the parties’ bargain arising from the party’s objective
manifestations of intent).
78 RESTATEMENT (SECOND) OF CONTRACTS § 43 & cmt. d; see
1 WILLISTON, supra note 24, § 5:10 (“If the offeror has not in fact engaged in
the reported conduct, or if the conduct engaged in is equally consistent with an
intent to deal with the offeree as with some other individual, the offer is not
deemed to be revoked.”).
79 RESTATEMENT (SECOND) OF CONTRACTS § 43 cmt. d; see Nott v.
Superior Ct., 204 Cal. App. 3d 1102, 1103 (Ct. App. 1988) (“Statements at an
arbitration regarding the value and disposition of a case are directed to the
resolution of the matter by an adjudication by the arbitrator. They do not
address the resolution of the matter by contract. Hence, they manifest no
intention to reject or revoke the outstanding section 998 offer. We see no
inconsistency between continued contemplation of contractual resolution while
putting one’s best foot forward in the adjudicative proceeding.”); Mitchell v.
Brimer, 1987 WL 5319, at *3 (Del. Ch. Jan. 12, 1987) (“The mere fact that the
seller is entertaining another offer, without more, will not give rise to a
mandatory inference that the seller no longer intends to accept a potential
buyer’s then outstanding offer.”); S. Oil Co. v. Wilson, 56 S.W. 429, 432 (Tex.
Civ. App. 1900, no writ) (offeror’s sale of its stock did not impliedly revoke offer
to sell real and personal property because the stock sale did not divest the
offeror of the title to the property, so no inconsistency existed).
27
market for sale is definite action clearly inconsistent with an intent to
sell it.
Here, the Bank’s agreement with Angel constitutes a revocatory
act because it is “some act inconsistent” with the offer to release the
judgment and is definite action clearly inconsistent with an intent to go
forward with that offer. The court of appeals erroneously concluded that
Tauch retained the power of acceptance because “an assignment
agreement that would not take effect until April 14 is not an action that
would prevent the bank’s [offer] from materializing into a contract with
Tauch should he accept the proposal before April 14.” 80 The court’s
reliance on the agreement’s effective date was misplaced for a couple of
reasons. First, inconsistent action need not rise to the level of a binding
contract with a third party to manifest revocatory intent. Second, the
existence of such a contract, even executory in nature, suffices. The
dispositive issue is not the offeror’s ability to enter the proposed bargain
but continued willingness to do so. Taking action that renders the
offeror unable to consummate the deal obviously bears on willingness to
do the deal, so a binding contract for the same subject matter may
objectively speak to the offeror’s intent. But so too could an invalid
contract with a third party 81 or even actions without the existence of any
other contract at all. 82
80 580 S.W.3d at 817.
See Palmer v. Schindler Elevator Corp., 133 Cal. Rptr. 2d 339, 341-42
81
(Ct. App. 2003).
See, e.g., Antwine v. Reed, 199 S.W.2d 482, 485-86 (Tex. 1947) (offer
82
to sell land was revoked by action of instructing real estate broker to take
property of the market); Norca Corp. v. Tokheim Corp., 227 A.D.2d 458, 458-59
28
The facts in Antwine are illustrative. There, although the offeror
had indeed entered a contract to sell the property to a third party, the
only information that had been communicated to the offeree was that
the offeror had instructed his agent to take the property off the
market. 83 Though not contractual in nature, we held that this action
was sufficient to impliedly revoke the prior offer. 84 Importantly, taking
the property off the market would not have prevented the offeror from
honoring the offer, yet the power of acceptance terminated because that
action manifested the offeror’s intent not to sell the property to the
offeree.
Another illuminating aspect of our analysis is the conclusion that,
even though the bank’s contract with the third party was executory in
nature, the vendee could nonetheless enforce it against the bank’s
successor for specific performance:
“One who, with knowledge, actual or constructive, of the
executory contract acquires the legal title under or through
a deed or mortgage executed by the vendor subsequently to
(N.Y. App. Div. 1996) (offer stating different terms of sale from original
outstanding offer revoked the prior offer because the price terms were
inconsistent); Wilson v. Sand Mountain Funeral Home, Inc., 739 So. 2d 1123,
1125 (Ala. Civ. App. 1999) (“Sand Mountain’s action in suing Wilson regarding
his alleged wrongful acquisition of stock and intentional devaluation of stock
constitutes a ‘definite action inconsistent with an intention to enter into the
proposed contract’ [to purchase Wilson’s stock shares for $25 each]. Thus,
Wilson’s power of acceptance was terminated when he was served with the
lawsuit.”(citations omitted)).
83 Antwine, 199 S.W.2d at 484 & 486 (recounting that “[t]he first notice
Reed had of the bank’s revocation of its offer to him was communicated by the
broker on or about the 28th day of December, 1944,” which was to the effect
that the “property was off the market”).
84 Id. at 486.
29
an executory contract for the sale of the land . . . , may be
compelled, at the suit of the vendee under the executory
contract, to perform the contract by conveying the legal
title, if the conditions are such that such relief could have
been granted against the vendor if he had not transferred
the legal title.” 85
That is to say, even though the terms of the agreement contemplated
future performance by one or both parties, it was nonetheless binding.
By the same token, when a party binds itself to an executory contract
with a future effective date, it is bound to that agreement.
Under our precedent, and as articulated in the Restatement, the
relevant inquiry is not “whether the Bank took action that would
prevent the offer from materializing into a contract” but whether “a
reasonable person, in the position of the offeree, would regard the offer
as withdrawn.” 86 The focus is on the offeror’s objective manifestations
of intent. 87 Applying that standard to the undisputed facts in this case,
the assignment agreement objectively manifests the Bank’s intent to
pursue other collection methods (as foreshadowed in Holden’s April 11
email) instead of settling with Tauch and releasing the judgment. As
85 Id. at 485 (quoting Langley v. Norris, 173 S.W.2d 454, 457 (Tex.
1943)).
86 1 WILLISTON, supra note 24, § 5:10.
RESTATEMENT (SECOND) OF CONTRACTS §§ 42 cmt. b (“[T]he offeree is
87
justified in relying on the offeror’s manifested intention regardless of any
undisclosed change in the offeror’s state of mind.”), 43 cmt. a (indirectly
communicated revocation is subject to the same qualifications as a directly
communicated revocation); 1 WILLISTON, supra note 24, § 5:9 (“[N]o case goes
so far as to hold that a change of mind on the part of the offeror, not manifested
by an overt act, will operate as a revocation.”).
30
the dissenting justice below put it, “[w]hether the assignment’s effective
date was a day later, a week later, or a month later” is beside the point.
As an alternative to reliance on the contract’s effective date,
Tauch asserts that the Bank’s action in contracting with Angel was not
inconsistent with the April 11 settlement offer or was at least equivocal
about the Bank’s intent. As to that matter, Tauch argues that the
assignment was not unequivocally inconsistent with the Bank’s prior
offer to him because the Bank could settle with Tauch and then
unilaterally terminate the assignment agreement “at any time upon 45
days’ written notice.” The question, however, is not whether the Bank
had the right to terminate the agreement but whether, by executing an
agreement that was not terminable for at least 45 days, the Bank
manifested an intent not to proceed with an offer that explicitly
instructed Tauch to act “as quickly as possible” because “the bank will
likely be look[ing] at other collection alternatives.” If the Bank opted to
terminate the assignment agreement and provided the required notice,
it would excuse the parties’ future performance, but the option to
terminate, even if exercised at a future date, neither nullifies the
agreement ab initio nor negates the Bank’s present intent. On the day
Tauch received the assignment agreement, it was a definite action
clearly reflecting the Bank’s intent to move forward with other collection
alternatives, as Holden had advised Tauch it would do.
Of a similar nature is the assignment’s provision making it
“without recourse” against the Bank. Contract terms designed only to
protect the Bank do not make the Bank’s action equivocal.
Nor is the Bank’s action equivocal merely because the assignment
might not have been a better deal for the Bank, depending on what
31
Angel was able to collect from the frozen accounts. The Bank’s
motivation for—or prudence in—assigning the judgment is irrelevant.
The bottom line is that agreeing to assign the judgment to a third party
for collection is wholly inconsistent with offering to release the judgment
against Tauch.
Tauch argues in rebuttal that the assignment agreement accords
with all three of Section 43’s examples of definite actions that are
consistent with an outstanding offer. Comment d states:
[M]ere negotiations with a third person, or even a definite
offer to a second offeree, may be consistent with an
intention on the part of the offeror to honor an acceptance
by the original offeree. Even a binding contract with a
third person may be expressly subject to any rights arising
under the outstanding offer. 88
With respect to the first example—“mere negotiations”—Tauch
analogizes to Mitchell v. Brimer, a Delaware case in which the offeree
was told that the offerors were engaged in “hot and heavy” negotiations
with a third party and were “about to accept another offer[.]” 89 The
offeree, however, had accepted the offer before learning that the offerors
had come to an agreement with the third party. 90 The court held that
the outstanding offer was not impliedly revoked merely on the offeree’s
knowledge that the offeror was negotiating with someone else because
“[s]uch information could have reasonably been interpreted as a signal
for [the offeree] to hurry up and accept the [offer]. It was hardly an
88 See RESTATEMENT (SECOND) OF CONTRACTS § 43 cmt. d.
89 1987 WL 5319, at *2 (Del. Ch. Jan. 12, 1987).
90 Id.
32
unambiguous message that the [offerors] had decided to terminate their
negotiations with the [offeree].” 91
The analogy to Mitchell is inapt. Tauch did not merely have
notice that the Bank was engaged in negotiations to assign the
judgment. To the contrary, he received a copy of the agreement—signed
by the very person with whom he had been negotiating—assigning the
judgment to Angel. Unlike the information in Mitchell, the assignment
agreement could not have “reasonably been interpreted as a signal for
[Tauch] to hurry up and accept the [offer].” 92 His argument to the
contrary rests on assumptions that (1) only a binding contract can
manifest revocatory intent and (2) the Bank was not bound to the
assignment until its April 14 effective date. Both premises, as we have
discussed above, are faulty.
Tauch’s reliance on the Restatement’s comment that a binding
contract could be consistent with an outstanding offer is likewise
misplaced. An example of such a situation is presented in Southern Oil
Co. v. Wilson, in which the offeror company’s sale of the majority of its
stock—a definite action—was not inconsistent with its offer to sell
certain property to the offeree. 93 The stock transaction was for an
entirely different subject matter than the outstanding offer. Here, the
assignment agreement specifically assigned the exact thing the Bank
had previously offered to release. And although the assignment
agreement did state that Angel would be “fully and completely
91 Id. at *4.
92 Id.
93 56 S.W. 429, 432 (Tex. Civ. App. 1900, no writ).
33
subrogated in and to all rights of [the Bank] relating to or arising from
the” judgment, it said nothing about being subject to a third party’s
rights arising under an outstanding offer.
Even if the assignment did not transfer to Angel an exclusive
right to enforce the judgment, as Tauch contends, the Bank’s intent to
collect on the judgment contemporaneously with Angel’s collection
efforts is definite and unequivocal action inconsistent with releasing the
judgment in Tauch’s favor.
If the relevant inquiry were whether the offeror’s action would
prevent the outstanding offer from materializing into a contract, the
assignment’s terms could arguably cause the assignment to be equivocal
with respect to the Bank’s intent to settle with Tauch. But that is not
the standard. The question is whether the offeror acted inconsistently
with the intent to honor the outstanding offer. As to that matter, the
assignment agreement reflects the Bank’s intent to do a different deal,
with a different party, on different terms with respect to the same
property. None of the assignment agreement’s terms cause it to become
anything less than an unequivocal action inconsistent with an intent to
honor the Bank’s previous settlement offer. As a matter of law, a
reasonable person would understand the Bank’s action in contracting
with a third party to collect on the judgment to be a withdrawal of the
settlement offer.
4. Communication
The mere fact that an offeror has engaged in definite action
inconsistent with an intent to go forward with a prior offer is not alone
sufficient to terminate the power of acceptance. No revocation can be
effective unless the offeree has knowledge of it. Accordingly, when the
34
offeror engages in negotiations with multiple parties, the offeror takes
the risk that more than one binding contract may be formed. 94 But if
the offeror has manifested an unwillingness to enter into the proposed
bargain and the offeree (or its agent) has acquired that information from
the offeror (or its agent) before acceptance, the offer is revoked. That is
the rule established by Antwine. Although this Court has not previously
considered the validity of a revocation where the offeree acquired
information about the offeror’s change of mind through other channels,
that rule is stated in Dickinson, memorialized in the current and former
Restatements of contract law, and recognized by other contract
treatises. While an indirect communication is amenable to a degree of
uncertainty, the doctrine recognized by Section 43 of the Restatement
and other treatises is defined by practical limitations that circumscribe
its ambit. 95
Tauch nonetheless asserts that, under Texas law, a revocation
can (and should) preclude acceptance from forming a binding contract
941 CORBIN ON CONTRACTS § 2.20 (“It is not unusual for an owner to
make several offers to sell specific property, even though the owner may know
that there is a possibility that more than one will accept and more than one
binding contract may be formed. In the desire to find at least one purchaser,
the owner takes that chance.”).
95 See RESTATEMENT (SECOND) OF CONTRACTS § 43 (providing that an
offer may be impliedly revoked by the offeree’s receipt of reliable information
from sources other than the offeror); RESTATEMENT (FIRST) OF CONTRACTS § 42
(same); 1 WILLISTON, supra note 24, § 5:10 (“It is now generally well settled
that an offer may be revoked under some circumstances at least by knowledge
on the part of an offeree that the offeror is no longer going to enter into such a
contract as was proposed by the offer, although that knowledge comes not from
the offeror or with his or her awareness, but through other channels.”); see also
Normile v. Miller, 326 S.E.2d 11, 18-19 (N.C. 1985) (holding offer was impliedly
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only when information about the offeror’s intent is communicated to the
offeree directly by the offeror. In the alternative, he argues that if
information about the offeror’s actions can come from other sources, the
information his agent acquired from Angel’s counsel—a competitor for
the judgment—was ineffective because it was unreliable as a matter of
law. We hold that an indirect communication of revocatory action may
be sufficient to terminate the power of acceptance, and in this case, the
assignment agreement, which was the revocatory act itself, was—as a
matter of law—reliable information of the Bank’s intent not to settle the
debt on the terms stated in Holden’s April 11 email. Conveyance of the
assignment agreement to Tauch’s agent by a third party does not render
it unreliable with respect to the inconsistency of intent that it plainly
manifests.
“In the ideal world, a revocation when properly made should be
as direct and explicit as an acceptance.” 96 We must acknowledge, as
does Williston’s contract treatise, that there can be “theoretical and
practical difficulties” with “allowing an effective revocation to be made
by anyone other than the offeror.” 97 In some cases, it may be difficult to
determine, with sufficient clarity, that the offeror is no longer inclined
to follow through with the offer. 98 But, the paucity of cases involving an
indirect communication of revocation “suggest[s] that real difficulties
revoked when real estate agent, who represented offeree but not offeror, told
offeree the property had been sold to someone else).
96 1 WILLISTON, supra note 24, § 5:8.
97 Id. § 5:10.
98 Id.
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with the concept . . . are minimal.” 99 Moreover, “part of the basis for the
doctrine is to prevent the unfairness inherent in allowing an offeree who
no longer reasonably believes the offer to be open to snap it up, to the
disadvantage of the offeror.” 100 That is precisely what happened here.
As soon as the ink was dry on the assignment, Angel’s counsel made its
existence known, and recognizing the document’s import (as a
reasonable person would), Tauch quickly sought to snap up the Bank’s
offer before the assignment agreement’s effective date.
While revocation by indirect communication may not have roots
in Texas law, it is hardly novel. Since Dickinson, treatises have
recognized that the power of acceptance terminates when, by whatever
means, the offeree receives objectively reliable information that the deal
is off. The standard being objective, it may give rise to questions about
what “a reasonable person acting in good faith” would believe. But in
this case, the information Tauch secured was no mere rumor or
unsubstantiated assertion of fact. To the contrary, Tauch had in hand
tangible evidence of the Bank’s inconsistent action. Whatever the outer
reaches of the doctrine may be, the circumstances here fall squarely
within it.
In today’s world, the spread of information can be rapid-fire. The
policy reasons for recognizing the validity of an indirectly communicated
revocation are even more compelling now than 175 years ago when
Dickinson stated the rule. Although the best—and usual—practice is
for the offeror to communicate directly with the offeree, cabining the law
99 Id.
100 Id.
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in such an absolute way is not pragmatic, realistic, or consonant with
modern realities and foundational contract law.
III. Conclusion
The Bank’s agreement assigning the judgment to Angel was
definite action inconsistent with its offer to Tauch to release the
judgment. Tauch’s receipt of reliable information about the
assignment’s existence and terms came from the agreement itself,
impliedly revoking the Bank’s offer and terminating Tauch’s power of
acceptance. Accordingly, the Bank and Tauch have no binding
agreement to settle and release the judgment. We therefore reverse the
court of appeals’ judgment and render judgment reinstating the trial
court’s judgment.
John P. Devine
Justice
OPINION DELIVERED: January 14, 2022
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