“The parties’ mutual assent is determined by their objective manifestations, not their secret intentions.” —Kapsner, Justice 

Paul Ehlen signed a document entitled “Purchase Agreement” (Agreement) offering to purchase real estate owned by John M. and LynnDee Melvin (the Melvins) for $850,000, with closing to be within twelve days. Two days after the offer was made, the Melvins modified the terms of the Agreement by correcting the spelling of LynnDee Melvin’s name and the description of the property, adding that the property was to be sold “as is,” that the mineral rights conveyed by the Melvins were limited to the rights that they owned, and that the property was subject to a federal wetland easement and an agricultural lease. The Melvins handwrote all of the changes on the Agreement, initialled each change, signed the Agreement, and returned it to Ehlen. When the Melvins had not heard from Ehlen on the date of the proposed closing, they notified Ehlen that the transaction was terminated. Ehlen sued the Melvins to enforce the Purchase Agreement as modified by them, alleging that there was a binding and enforceable contract. The trial court held that the Melvins had made a counteroffer that had not been accepted by Ehlen, and therefore there was no contract. Ehlen appealed. 

Issue: Was a counteroffer made by the Melvins that had been accepted by Ehlen? 

Language of the Court: The parties’ mutual assent is determined by their objective manifestations, not their secret intentions. We conclude the evidence supports the court’s finding that the parties did not agree to the essential terms of the agreement and the Melvins’ modifications to the agreement constituted a counteroffer. Ehlen argues he accepted any counteroffer the Melvins made. It is a general rule that silence and inaction do not constitute an acceptance of the offer. Ehlen did not sign the modified agreement or initial the changes. The evidence supports the court’s finding that Ehlen did not accept the Melvins’ counteroffer. 

Decision: The Supreme Court of North Dakota held that no agreement existed between Ehlen and the Melvins. 

Ethics Questions: Did Ehlen act ethically in trying to enforce the purported contract? What would be the consequence if silence were considered acceptance?