Practice Problems: Negotiation Hypo

Mr. Hoffman, who owned and operated a local convenience store, was interested in expanding his business to a grocery store. Red Owl franchises their grocery stores. Hoffman contacted a Red Owl agent, Mr. Lucowitz, to discuss what steps Hoffman would need to take to obtain a Red Owl franchise. Lucowitz worked with local proprietors to inform them of ways to best position themselves to open up a Red Owl store, but the final decision-making was made at Red Owl headquarters. Lucowitz told Hoffman to sell his local convenience store, move to a new town, lease a new lot and be prepared to have $18,000 in a down payment. Hoffman did all that Lucowitz suggested.

Shortly thereafter, Hoffman met with the Red Owl Chief Financial Officer (CFO) at Red Owl Headquarters. The CFO stated that Hoffman would need $24,000 to obtain the franchise, and that if he obtained the $24,000, Hoffman was "good to go" with a franchise store. Hoffman secured a loan from his father-in-law such that Hoffman now had $24,000. Believing that he met all of the requirements to obtain the Red Owl franchise, Hoffman returned to the CFO. When Hoffman informed the CFO that he had the $24,000, the CFO responded that no part of the $24,000 payment could include a loan, that is, the father-in-law would have to make a gift. Ultimately, Hoffman was unable to persuade his father-in-law to gift him the money.

Hoffman believes that the parties entered into a contract because Hoffman did all of the things he was asked to do - sell his convenience store, move to a new town, obtain a new lease lot and obtain the down payment. Red Owl disagrees.

Does Hoffman have an agreement?