United States Court of Appeals
For the First Circuit
No. 01-1329
GEORGE R. MCGURN,
Plaintiff, Appellee,
v.
BELL MICROPRODUCTS, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Reginald C. Lindsay, U.S. District Judge]
Before
Selya and Lipez, Circuit Judges,
and Singal,* District Judge.
Robert W. Tollen, with whom Kent D.B. Sinclair and Seyfarth
Shaw were on brief, for appellant.
Theresa Kelly Banash for appellee.
March 25, 2002
____________
* Of the District of Maine, sitting by designation.
LIPEZ, Circuit Judge. This case requires us to evaluate
the district court's application of an exception to the general
rule that silence does not constitute acceptance of the terms of a
contract offer.
I.
Bell Microproducts, Inc. (Bell) mailed George R. McGurn
a signed offer of employment, which stipulated that if McGurn was
terminated without cause during the first twelve months of his
employment with Bell he would receive a severance package worth
$120,000. In countersigning and returning the offer letter, McGurn
crossed out the word "twelve" and replaced it with "twenty-four."
McGurn initialed his alteration, but otherwise did nothing to call
it to Bell's attention. Bell terminated McGurn thirteen months
later and refused to pay him the severance package on the ground
that the twelve-month period stipulated in the offer letter had
passed, and that McGurn's replacement of "twelve" with "twenty-
four" was a counteroffer which Bell had never accepted.
McGurn filed an action in the Massachusetts Superior
Court to collect the compensation he claimed Bell owed him under
the contract, and Bell removed the case to federal district court
on the basis of diversity of citizenship. The parties agree that
Massachusetts law governs this dispute. Presented with cross-
motions for summary judgment, the district court granted summary
judgment for McGurn, finding that Bell's silence in response to
McGurn's counteroffer constituted an acceptance of the 24-month
termination clause. We find that conclusion premature. The import
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of Bell's silence cannot be decided as a matter of law on a motion
for summary judgment because of genuine issues of material fact
about whether Bell knew or should have known of McGurn's
counteroffer. We therefore vacate the district court's judgment
and remand for further proceedings.
II.
Except as noted, the following facts are undisputed.
Bell Microproducts is a distributor of semiconductor parts and
components with headquarters in San Jose, California. McGurn is a
resident of Massachusetts. In March of 1997, Bell's President,
Donald Bell, met with McGurn, who at the time was gainfully
employed elsewhere, to discuss the position of Vice President for
the Eastern Region at Bell. McGurn said that if he came to work
for Bell he would require a written contract that included a
"termination clause" stipulating that he would receive six months
salary and half his commissions in the event that he was fired.
During the next few months McGurn communicated several times with
Bill Murphy, the Bell official to whom McGurn would report, and
expressed interest in pursuing the position.
Based on these discussions, Murphy's secretary prepared
an offer letter and delivered it to Linda Teague, Bell's Director
of Human Resources. Teague dated the letter June 10, 1997, signed
it, and mailed it to McGurn. Upon receipt of the letter, McGurn
telephoned Murphy to discuss the offer and the absence of a
termination clause. McGurn then had a series of telephone
conversations with Donald Bell in which a termination clause was
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discussed. On June 29, McGurn requested a termination clause that
would remain in force as long as he worked for Bell. However, he
also said to Donald Bell that he would consider one that was
limited to the first twenty four months of his employment.
According to McGurn, Donald Bell replied that a twenty-four month
termination clause would be acceptable.
Teague then drafted a second offer letter, in
consultation with Donald Bell, which she signed and dated July 1,
1997. The letter included a termination clause stipulating that
"[i]f your status as an employee with Bell Microproducts is
terminated within the first 12 months of employment for any reason
other than gross misconduct, upon termination you will receive a
six-month severance package." In response, McGurn drafted his own
proposed offer letter, dated July 2, 1997, which included a
paragraph on termination "for cause," defined as conviction of a
felony or gross negligence or misconduct on the job, and a
paragraph on termination "without cause," which was open-ended:
[T]he Company may terminate your employment
without cause. In such event, you will
continue to receive your base salary for a
period of six (6) months following your
termination of employment, [and] . . . you
will receive an additional lump-sum amount
equal to $40,000 or 50% of annual incentive.
McGurn faxed his proposed offer letter to Murphy.
McGurn's next contact with Bell was his receipt of an
offer letter dated July 3, 1997, signed by Teague. The letter
included the following paragraph on termination without cause (we
have underlined the material change from McGurn's July 2 proposal):
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[T]he Company may terminate your employment
without cause. In the event that this occurs
within your first twelve months of employment,
you will continue to receive your base salary
for a period of six (6) months following your
termination of employment, [and] . . . you
will receive an additional lump-sum amount
equal to $40,000 or 50% of annual incentive.
The letter concluded with Teague's request that McGurn "sign an
acknowledgment of this offer of employment and return to me for our
files." The following appeared under Teague's signature:
I acknowledge my acceptance of the offer as
described above and my start date will be
__________.
Signed _________________ Date _______________
McGurn signed his name and entered "7-8-97" in the other two blank
spaces. In addition, he crossed out the word "twelve" in the
termination clause, inserted "twenty four" directly above it, and
initialed the change. The alteration was in the center of the
second page of the two-page letter, five inches above McGurn's
signature. McGurn returned the letter to Teague (or possibly to
Murphy), and started work on July 8, 1997.1
McGurn advised no one at Bell that he had modified the
July 3 offer letter, and Teague, Murphy, and Donald Bell all deny
having viewed the letter upon its return. The Human Resources
Department did receive the letter, but Teague testified that she
herself would only have been notified if the letter had not been
received, as McGurn could not have been paid unless a countersigned
1
Bell testified that he returned the letter to "Teague or
Bill Murphy." Teague testified that her department received the
letter.
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copy of the offer letter was in Bell's files. Although there is no
direct evidence that anyone in the Human Resources Department
examined the returned letter, there was evidence that it was Bell's
practice to check that returned offer letters had been signed by
the employee.
In or around April of 1998, Brian Clark (Murphy's
successor at Bell) concluded that McGurn's performance was not
satisfactory. At some point after Clark made this determination,
but before he fired McGurn on August 3, 1998, Murphy discovered
McGurn's alteration of the offer letter, and discussed it with
Teague and Donald Bell. Upon learning of his termination on August
3, 1998, after approximately 13 months at Bell, McGurn conveyed to
Clark his belief that his contract included a two-year termination
clause. Clark disagreed, and Bell refused to pay the amounts
specified in the termination clause.
McGurn sued Bell for breach of contract in the Superior
Court of Middlesex County, Massachusetts. Based on diversity of
citizenship, Bell removed the case to federal district court. 28
U.S.C. § 1332(a)(1). The parties filed cross-motions for summary
judgment. In a Memorandum and Order dated February 15, 2001, the
district court granted McGurn's motion and denied Bell's motion.
The district court found that McGurn's alteration of the July 3
offer letter constituted a counteroffer which, in the circumstances
of this case, Bell had accepted by its silence. The court entered
judgment for McGurn in the amount of $120,000 plus interest, and
Bell filed a timely notice of appeal.
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III.
The parties agree that McGurn's alteration of Bell's
offer letter constituted a rejection of that offer and created a
counteroffer. See Restatement (Second) of Contracts § 59 (1981)
("A reply to an offer which purports to accept it but is
conditional on the offeror's assent to terms additional to or
different from those offered is not an acceptance but is a counter-
offer."). What is in dispute is whether Bell accepted McGurn's
counteroffer. The district court concluded that it did because
Bell should have known about the change made by McGurn, and hence
its silence constituted an acceptance of McGurn's counteroffer:
Although no one on behalf of the defendant
signed McGurn's counteroffer, the defendant
admits it received the offer and accepted
McGurn's services for thirteen months. A
presumably sophisticated employer who receives
a signed letter of engagement from a
prospective employee and fails to read the
letter, particularly after weeks of
negotiation, does so at its own peril. Thus,
in the circumstances of this case, the
defendant's failure to read the terms of the
offer [does] not preclude the formation of a
contract. The defendant accepted the terms of
the plaintiff's offer when it decided to and
did employ the plaintiff for thirteen months.
Urging a different theory than the "should have known" theory
adopted by the district court, McGurn argues that Bell's silence in
the face of his counteroffer amounted to an acceptance because Bell
knew that McGurn had amended the termination clause, but gave no
indication that it rejected the change. Bell denies that it knew
about McGurn's alteration of the offer letter.
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As a general rule, silence in response to an offer to
enter into a contract does not constitute an acceptance of the
offer. See Restatement (Second) of Contracts § 69 cmt. a
("Acceptance by silence is exceptional."); Polaroid Corp. v.
Rollins Envtl. Servs. (NJ), Inc., 624 N.E. 2d 959, 964 (Mass. 1993)
(noting that "silence does not ordinarily manifest assent"). There
is, however, an exception to the rule against acceptance by silence
"[w]here an offeree takes the benefit of offered services with
reasonable opportunity to reject them and reason to know that they
were offered with the expectation of compensation."2 Restatement
(Second) of Contracts § 69(1)(a).
In Gateway Co. v. Charlotte Theatres, Inc., 297 F.2d 483
(1st Cir. 1961), a case in many respects similar to this one, the
defendant had sent the plaintiff two copies of a document which
reduced to writing an oral agreement for the defendant to install
air conditioning in the plaintiff's movie theater, with one copy to
be countersigned and returned. Id. at 485. The plaintiff signed,
but also inserted a provision that the work would be performed by
a certain date. Id. The plaintiff returned the countersigned
contract with a cover letter noting its "understanding" that the
work would be performed by that date (although the letter made no
2
Although the Restatement exception, by its terms,
addresses a situation in which the offeree advances no payment at
all in exchange for the offeror's services, the district court
concluded correctly that the exception also applies when there is
a dispute about the nature or extent of required compensation. See
Polaroid, 624 N.E.2d at 964 (applying the exception to a dispute
over whether a waste disposal contract included an indemnification
clause).
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reference to the alteration of the contract itself). Id. at 485-
86. We stated that "[i]n the absence of actual knowledge [of the
alteration of the contract], the test is whether there was reason
for [the defendant] to suppose that such addition might have been
made." Id. at 486. We held that because of the cover letter
flagging the issue, defendant's silence could constitute acceptance
of plaintiff's counteroffer.
Importantly, we also noted in Gateway that "absent the
[cover] letter, the case would seem more like" Kidder v. Greenman,
187 N.E. 42 (Mass. 1933). Gateway, 297 F.2d at 486. In Kidder, a
tenant had signed and returned a lease to her landlord with the
understanding that the landlord would fill in certain blank spaces
pursuant to an oral agreement. The landlord then completed the
lease so as to include a term contrary to the oral understanding,
signed it, and returned it to the tenant, who "did not look at the
lease at the time she received it except to slit the envelope and
see it contained a lease." Kidder, 187 N.E. at 45 (internal
quotation marks omitted). The court declined to enforce the
disputed term against the tenant on the ground that she "had no
reason to think that the [landlord] had not completed the lease in
the authorized manner and, therefore, [had] no occasion to examine
it, when it was returned to her, to see if he had done so." Id. at
48. The Kidder court concluded that "[i]n these circumstances the
doctrine that a person who accepts an instrument . . . without
reading it . . . is charged with knowledge of [its] contents is not
applicable." Id. (citations omitted).
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We distill from the Restatement and the Gateway and
Kidder precedents the legal rule in Massachusetts that silence in
response to an offer may constitute an acceptance if an offeree who
takes the benefit of offered services knew or had reason to know of
the existence of the offer, and had a reasonable opportunity to
reject it. See Restatement (Second) of Contracts § 69(1)(a);
Gateway, 297 F.2d at 485-86; Kidder, 187 N.E. at 48. We turn now
to the application of that rule in this case.
IV.
Under Federal Rule of Civil Procedure 56(c), a court may
enter summary judgment if the record "show[s] that there is no
genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law." We review the district
court's grant of summary judgment de novo, and examine the record
in the light most favorable to the party against whom summary
judgment had been entered, drawing all reasonable inferences in
that party's favor. Barreto-Rivera v. Medina-Vargas, 168 F.3d 42,
45 (1st Cir. 1999). We note that "disputes about whether a
contract has or has not been formed as the result of words and
conduct over a period of time . . . present interpretive issues
traditionally understood to be for the trier of fact."
Charbonnages de France v. Smith, 597 F.2d 406, 414-15 (4th Cir.
1979). This is so unless "the manifestations of intention of both
parties to be bound, or of either not to be bound, are so
unequivocal as to present no genuine issue of fact." Id. at 415.
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A. The District Court's Opinion
In response to Bell's assertion that it did not notice
McGurn's alteration of the offer letter until just before his
termination, the district court observed that "absent fraud, a
party to a contract is bound by the terms of the contract whether
or not he read them." The court added: "It will not do for a man
to enter into a contract, and, when called upon to respond to its
obligations, to say that he did not read it when he signed it, or
did not know what it contained." The district court's legal
proposition is sound, but inapposite to this case. The disputed
term was added to the offer after Bell had signed it. The relevant
question is why, as a matter of law, Bell should be expected to re-
read an offer it had written and signed, upon its return with
McGurn's countersignature.
In response to that question, the district court declared
that "[a] presumably sophisticated employer who receives a signed
letter of engagement from a prospective employee and fails to read
the letter, particularly after weeks of negotiation, does so at its
own peril." Although the logic of this generalization has some
appeal, its generality is an insurmountable problem. Unless the
record establishes that Bell knew or had reason to know that McGurn
had modified what Bell had written--and the district court points
to no facts in the record that would support such a conclusion--we
cannot say that Bell's silence, as a matter of law, constituted an
acceptance of McGurn's counteroffer.
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Although we decline to endorse the district court's
generalization, "we may affirm [a summary judgment] order on any
ground revealed by the record." Houlton Citizens' Coalition v.
Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999). We therefore
examine the record to see if, drawing all reasonable inferences in
Bell's favor, the evidence nevertheless compels the conclusion that
responsible officials at Bell knew or should have known about
McGurn's counteroffer far enough in advance of his termination that
Bell had a reasonable opportunity to reject the 24-month
termination clause if it wished to avoid being bound. Summary
judgment for McGurn would be proper if Bell had actual or
constructive knowledge of McGurn's counteroffer at the time he
returned the offer letter, or if, when Clark discovered the
counteroffer, he had a "reasonable opportunity to reject" it before
he fired McGurn, but instead continued to "take[] the benefit of
[McGurn's] services" without speaking up. Restatement (Second) of
Contracts § 69(1)(a).
There are three possible grounds for affirmance suggested
by the record, two involving alleged actual knowledge and one
involving constructive knowledge. We examine them in turn.
B. Prominence of the Alteration
McGurn argues that Bell had actual knowledge of the
alteration of the offer letter at the time of its return. Although
McGurn advances no direct evidence that anyone at Bell noticed his
revision of the termination clause, he points out that the
alteration was made on the same page that bore his signature, which
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Bell acknowledges an unknown employee checked pursuant to company
policy. McGurn infers from this that the unknown employee "had to
have seen the change" in the duration of the termination clause,
because "one's eyes are immediately drawn to the change made by
McGurn and his initials above that change."
While an inference that Bell "had to have seen the
change" would be permissible based on the evidence in the record--
the alteration was in the center of the very page McGurn had
signed--we cannot say that a factfinder would be required to
conclude that the Bell employee who checked for McGurn's signature
must have noticed McGurn's alteration of the termination clause
half-way up the page. That is, the evidence that a Bell employee
must have seen McGurn's alteration is not "so one-sided that
[McGurn] must prevail as a matter of law." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 252 (1986).
C. Clark's Discovery
Clark declared that he examined the countersigned offer
letter and discovered what McGurn had done "[a]t some point after
making [the] decision [to terminate McGurn], but before the actual
termination." The record only establishes that this discovery was
made during or after April of 1998, and before McGurn was fired in
August of 1998.3 McGurn argues that once Bell discovered his
3
In Bell's Statement of Material Facts, the timing of the
discovery is characterized as follows: "McGurn's change . . . was
not discovered until sometime during or after April, 1998,
after . . . Brian Clark[] had determined that McGurn's performance
was not satisfactory."
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counteroffer it had an obligation to speak up if it wished to
reject it. Bell points out, however, that Clark "could have
discovered the altered document as late as the day before" he fired
McGurn. Whatever the merits of McGurn's legal argument on this
point--a matter as to which we take no view--this factual
uncertainty precludes summary judgment for McGurn based on Clark's
actual knowledge of McGurn's counteroffer.
D. Teague's Responsibility
We also examine the record for evidence that Teague
(Bell's Director of Human Resources), or an employee in her
department acting on her behalf, should have determined if the
returned offer letter had been modified. Teague had participated
in the negotiations with McGurn. She stated at her deposition that
"Bill Murphy and I worked together on all of these offer letters,"
and Donald Bell testified that he "consult[ed] with Linda [Teague]"
during the drafting of the letter.4 The July 3 offer letter from
Bell to McGurn was signed by Teague, and indicated that McGurn
should return the countersigned copy to her. Under these
circumstances, a jury might conclude that McGurn could reasonably
have expected Teague (or Murphy) to inspect the document upon its
return. Moreover, the offer set out in Bell's letter was not a
mere reduction to writing of a previous oral agreement; it was a
step in a negotiation which Bell had no reason to assume had been
4
The actual discussions (in person and via telephone)
between Bell and McGurn were conducted by Bill Murphy and Donald
Bell, not by Teague.
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concluded. Although Teague requested that McGurn simply sign and
return the letter unamended, the evidence supports the inference
that she had no basis for assuming he would do so. Instead, she
should have checked the document to ensure that he had not made
further changes.
Although an inference that Teague should have examined
the returned offer letter with greater care would be permissible
based on the evidence in the record, the evidence, again, does not
compel such an inference. Bell disputes the notion that Teague (or
her subordinates) had any reason to check the returned offer letter
for unauthorized modifications, and a factfinder might conclude
that Teague had no reason to inspect the letter absent any
indication from McGurn that he had revised a material term.5
We have stated that "[o]rdinarily the question of whether
a contract has been made . . . is for the jury," Ismert & Assocs.,
Inc. v. New England Mut. Life Ins. Co., 801 F.2d 536, 541 (1st Cir.
1986), except where "[t]he words and actions that allegedly formed
a contract [are] so clear themselves that reasonable people could
5
Because the July 3 offer letter was signed by Teague, and
McGurn returned it to Teague (or Bill Murphy), we need not be
detained by Bell's argument that the low-level employee who
examined the returned letter lacked the authority to bind the
corporation (with his silence) on the question of McGurn's
termination clause. Teague having requested that McGurn return the
letter to her, it would be no defense for her to say that a
subordinate in her office who lacked the authority to bind the
corporation opened the letter and failed to show it to her. See
Gateway, 297 F.2d at 486 & n.4 (holding corporation responsible for
contents of letter addressed to its president but read by a
secretary). To accept Bell's argument on this point would be to
penalize McGurn for Teague's failure to read her own mail. The
same logic applies if McGurn returned the letter to Murphy, as he
suggested he might have done.
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not differ over their meaning," Borque v. FDIC, 42 F.3d 704, 708
(1st Cir. 1994) (internal quotation marks omitted). When, as is
the case here, "the facts support plausible but conflicting
inferences on a pivotal issue in the case, the judge may not choose
between those inferences at the summary judgment stage." Coyne v.
Taber Partners I, 53 F.3d 454, 460 (1st Cir. 1995); accord 10A
Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal
Practice and Procedure § 2725 at 433-37 (3d ed. 1998) ("[I]f the
evidence presented on [a] motion [for summary judgment] is subject
to conflicting interpretations, or reasonable people might differ
as to its significance, summary judgment is improper.") (footnotes
omitted).
V.
In sum, drawing all reasonable inferences in Bell's
favor, as we must in reviewing the district court's entry of
summary judgment against Bell, we cannot say that the facts in the
record compel a conclusion that Bell noticed or should have noticed
McGurn's modification of Bell's offer letter, and that its silence,
therefore, constituted an acceptance of McGurn's offer. Instead,
those issues must be resolved by the factfinder at a trial.
Judgment vacated. Remanded for further proceedings
consistent with this opinion. Each party to bear his or its own
costs.
-- Separate Opinion Follows --
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SELYA, Circuit Judge (dubitante). I write separately
because I doubt that the court's opinion reflects either the
practicalities of the case at hand or the result that the Supreme
Judicial Court (SJC) would reach.
The critical facts are undisputed. McGurn's counteroffer
- the letter containing his modification of the termination clause
- was received at Bell's headquarters in the ordinary course and
routed by it to its human resources department. That letter formed
the basis for the company's treatment of McGurn as an employee and
remained part of the corporate personnel records for the duration
of his employment. Given these facts, the case turns on whether
Bell should be said to have accepted McGurn's counteroffer.
While no official of the company ever said "I accept" in
so many words, acceptance can occur by silence under certain
circumstances. See, e.g., Ismert & Assocs., Inc. v. New Engl. Mut.
Life Ins. Co., 801 F.2d 536, 541-42 (1st Cir. 1986); Polaroid Corp.
v. Rollins Envtl. Servs. (NJ), Inc., 624 N.E.2d 959, 964 (Mass.
1993); see also Restatement (Second) of Contracts § 69 (1981). One
such set of circumstances, pertinent here, is when an offeree fails
to reply to an offer yet takes the benefit of the offered services
with reasonable opportunity to reject them and reason to know that
they were tendered in the expectation of a particular
consideration. See Restatement (Second) of Contracts § 69(1). In
such a situation, it would be manifestly unjust for an offeree to
reap the benefit of the services without letting the offeror know
that it had no intention of paying the remuneration that the
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offeror expected to receive. Id., cmt. b. Thus, fundamental
fairness permits silence to operate as an acceptance.
This principle is part of the warp and woof of
Massachusetts contract law. See Polaroid, 624 N.E.2d at 964; Bump
v. Robbins, 509 N.E.2d 12, 18-19 (Mass. App. Ct. 1987). On the
facts of record here, I think it likely that the SJC would find, as
did the able district judge, that Bell implicitly assented to (and,
therefore, should be bound by) the terms of McGurn's counteroffer.
After all, Bell unreservedly accepted McGurn's services, having
reason to know from its own files that those services were being
rendered with an expectation that the terms of the counteroffer
(including the amended termination clause) would be fulfilled.6
To be sure, Bell tells us that, even though it employed
McGurn for thirteen months pursuant to the letter that set out the
terms of his counteroffer, no one in its employ noticed the
modification. But there is no hint here of chicanery on McGurn's
part, and I doubt that ignorance induced by a party's own
negligence or lassitude is a basis for escaping from contractual
obligations. To the contrary, the acceptance of offered services,
under circumstances in which the beneficiary of those services
ought to have known that the provider expected to be compensated
6
Suppose the shoe was on the other foot, and McGurn's
counteroffer had included not only an expanded termination clause
but also a covenant not to compete. Only an innocent would assume
that Bell would refrain from attempting to enforce the covenant
against McGurn. To my mind, this example illustrates that the
majority's resolution of the case lets Bell have its cake and eat
it too. I have no stomach for so one-sided a result - and I doubt
that the SJC would find it appetizing.
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for them in a certain way, is the functional equivalent of express
assent. See Bump, 509 N.E.2d at 18-19. This case seems to fit
within the contours of that rule.
To sum up, I believe that a party should not be able to
insulate itself from ex contractu liability by professing that it
neglected to read the very document essential for the formation of
the contract, especially when that document has reposed in its own
files at all relevant times. Were the law otherwise and the
majority's view taken to its logical extreme, an offeree could
completely redefine its responsibilities by the simple expedient of
claiming that it was not aware of what its own records plainly
showed. I doubt that the SJC would countenance so counterintuitive
a result. Cf. Upton v. Tribilcock, 91 U.S. 45, 50 (1875)
(observing that "[i]t will not do for a man to enter into a
contract, and, when called upon to respond to its obligations, to
say that he did not . . . know what it contained. If this were
permitted, contracts would not be worth the paper on which they are
written"). Given this doubt, I respectfully decline to join the
court's opinion.
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