Opinion ID: 2127356
Heading Depth: 1
Heading Rank: 2

Heading: Written Contract

Text: Garrett and Moore contend (and the trial court concluded) that the missing terms of the oral contract purportedly formed in February were filled in when the loan application was approved by the bank in March and, thus, the contract was completely formed at that time and subject to being enforced. If so, this means that the contract was formed before the commitment letter was issued by the bank. As we have already concluded in the discussion in section I, however, there was no enforceable oral contract formed before the commitment letter was issued. Yet, the submission and approval of the loan application connotes activity of a contractural nature and, therefore, we must examine whether a contract was formed at the time the commitment letter was issued. In our view, the written loan application completed by or on behalf of Garrett and Moore was a solicitation for offers directed to the bank. The application was not an offer to borrow the money because, even if the application had been accepted by the bank, Garrett and Moore would still not have been obligated to borrow the money from the bank and any supposed contract would fail for lack of mutuality. Accordingly, the loan application must be viewed as a solicitation for offers. The issuance of the loan commitment by the bank constituted an offer by the bank to Garrett and Moore to lend the money pursuant to the terms and conditions of the commitment. In order to obligate the bank to comply with its offer, Garrett and Moore had to satisfy the preconditions that were a part of the offer within the period of time that the offer remained open. [2] One of the conditions precedent contained in the loan commitment was a guaranty of the indebtedness by a state agency. It is axiomatic that a party seeking to enforce a contract must establish that all conditions precedent have been fulfilled, and that the burden of proof is on this party. See, Penthouse Int'l v. Dominion Fed. Savings & Loan Assoc. (1988) 2d Cir., 855 F.2d 963. Accordingly, at trial the burden fell on Garrett and Moore to establish that the conditions precedent were or could have been fulfilled. With respect to the required guaranty by a state agency, there was conflicting evidence concerning whether this condition could have been fulfilled, and the trial court concluded that it was completely unknown whether a state agency would have extended the guaranty. Therefore Garrett and Moore did not meet their burden of proving that this condition could have been fulfilled, and thus did not meet their burden of proving a valid acceptance of the bank's conditional offer to loan them money. Thus, no written contract was formed.