Opinion ID: 1204270
Heading Depth: 2
Heading Rank: 2

Heading: R.J. Braunschweig Personally Guaranteed Performance

Text: The trial court ruled that: In September, Defendant R.J. Braunschweig, a shareholder and director of NGC, agreed to co-sign the subcontract with NGC in lieu of furnishing the bond. ... . The elements of a contract, and its breach, have also been demonstrated, with regard to plaintiff's claim against R.J. Braunschweig. Defendant R.J. Braunschweig is contractually bound to guarantee the performance of NGC of its promise. NGC argues that R.J. Braunschweig did not guarantee NGC's performance. It makes two claims. First, it argues that Braunschweig cannot be held to have guaranteed an agreement based not on contract but rather on estoppel law. Second, it claims that M-N never accepted Braunschweig's limited guarantee. Courts construe guarantees under traditional contract principles. A guaranty is a contract between two or more persons, founded upon consideration, by which one person promises to answer to another for the debt, default or miscarriage of a third person, and, in a legal sense, has relation to some other contract or obligation with reference to which it is a collateral undertaking. Like any other contract, its formation is governed by principles of mutual assent, adequate consideration, definiteness and a meeting of the minds (38 C.J.S. Guaranty § 8, p. 1143). Timi v. Prescott State Bank, 220 Kan. 377, 553 P.2d 315, 324 (1976) (quoting Trego WaKeeney State Bank v. Maier, 214 Kan. 169, 519 P.2d 743 (1974) (other citations omitted). Braunschweig's claim that a guarantee requires a valid underlying contract relies on too literal an interpretation of the relevant authorities. Under Timi, a guarantor is liable on the underlying debt, default, or miscarriage of the primary obligor; the guarantee relates to some other contract or obligation.  553 P.2d at 324 (emphasis added). Herein we have affirmed the superior court's view that the promise to perform guaranteed by Braunschweig was an obligation enforceable under the doctrine of promissory estoppel. To hold that Braunschweig escapes liability on the guarantee because that obligation was enforced under principles of estoppel rather than contract law would thwart the parties' original intent in negotiating the guarantee. Moreover, in Alaska Bussell we adopted the view of promissory estoppel expressed by the California Supreme Court in Drennan v. Star Paving, 51 Cal.2d 409, 333 P.2d 757 (1958), and therein noted that court's analogy of subcontractor's bids to option contracts. 688 P.2d at 580. We then added: [I]f a contractor is to deliver a set price to an owner, these bids must be binding for a reasonable time... . Promissory estoppel, as applied in Drennan and adopted by this court, is a necessary element of this scheme. Id. Application of promissory estoppel in this case thus effectively results in an option contract. We are aware of no authority suggesting that an option contract cannot be guaranteed. Therefore, the superior court's application of estoppel rather than contract principles to the underlying NGC promise does not bar enforcement of the guarantee. Braunschweig also claims that his promise was a counteroffer that M-N never accepted. This court must, however, view the evidence in the light most favorable to M-N. See Curran, 579 P.2d at 527. Here, the record demonstrates an offer by R.J. Braunschweig accepted by M-N for valid consideration. Both M-N and NGC agree that M-N was the offeree with respect to Braunschweig's guarantee. M-N's acceptance could only have occurred after his oral promise of September 1; M-N claims to have accepted his guarantee by ordering NGC to perform in a September 23 telegram. The telegram cannot constitute M-N's acceptance because it impliedly rejected NGC's qualifications of the product specifications and warranties; an acceptance must be in exact compliance with the terms of the offer. Thrift Shop v. Alaska Mutual Savings Bank, 398 P.2d 657 (Alaska 1965). See also Hall v. Add-Ventures, 695 P.2d 1081, 1087 n. 9 (Alaska 1985). M-N claims that it was unable under the general contract to accept NGC's modification and therefore it did not materially modify Braunschweig's guarantee. This claim is meritless. Nonetheless, we find that M-N did accept Braunschweig's offer. After Braunschweig's promise, M-N sent NGC the revised contract with the bond provision deleted and space for his individual signature added. M-N's assent to the contract may reasonably be inferred from this act. See Howarth v. First National Bank of Anchorage, 596 P.2d 1164 (Alaska 1979) (assent may be based on reasonable meaning of party's acts). By sending the revised contract, M-N accepted Braunschweig's offer.