Opinion ID: 2362881
Heading Depth: 2
Heading Rank: 2

Heading: Materiality of an Omitted Provision.

Text: Respondents ask this Court to apply the objective theory of contracts followed generally in Maryland, i.e., that in order to exercise effectively the right of first refusal, Bramble's exercise must have been unequivocal and in accordance with the exact terms of the triggering offer. Katz, 257 Md. at 118, 262 A.2d at 547; Foard, 205 Md. at 446, 109 A.2d at 105-06. There is some social and legal utility in applying, to the purported exercise of a pre-emptive right, the requirement that the rightholder duplicate exactly the terms of the triggering offer because it tends to avoid a situation where the preemptioner otherwise may impede the alienability of real property. As the U.S. Court of Appeals for the Seventh Circuit stated, the holder of a preemptive right should not be enabled to justify its failure to match a term in the third-party's triggering offer on the ground that the omitted non-price term is immaterial: [w]ithout [an exact matching requirement], the right [of first refusal] is an impediment to the marketability of property, because it gives the holder of the right a practical power to impede a sale to a third party by refusing to match the third party's offer exactly and then arguing that the discrepancy was immaterial. Miller v. LeSea Broadcasting, 87 F.3d 224, 226 (7th Cir.1996). Other courts likewise have extended to the exercise of a preemptive right the mirror image rule employed in determining whether an option was exercised effectively. West Texas Transmission, L.P., v. Enron Corp., 907 F.2d 1554, 1565 (5th Cir.1990) (Whether or not a particular contract term is material is not the standard by which we judge whether an acceptance which rejects that term is a valid exercise of the right of first refusal. Like the acceptance of any other offer, the exercise of an option, must be unqualified, absolute, unconditional, unequivocal, unambiguous, positive, without reservation and according to the terms or conditions of the option.) (citations omitted); [10] Weber Meadow-View Corp. v. Wilde, 575 P.2d 1053, 1055 (Utah 1978) (implying that when terms are added in good faith to a triggering offer, and not with the ulterior purpose of defeating a right of first refusal in the property, the terms of the triggering offer must be matched exactly). [11] Many jurisdictions, on the other hand, do not require a preemptioner to match immaterial terms found in a triggering offer. See, e.g., Prince v. Elm Inv. Co., 649 P.2d 820, 825 (Utah 1982) (quoting Brownies Creek Collieries, Inc. v. Asher Coal Mining Co., 417 S.W.2d 249, 252 (Ky.1967) ([I]f the holder of the right of first refusal cannot meet exactly the terms of the conditions of the third person's offer, minor variations which obviously constitute no substantial departure should be allowed. And defeat of the right of refusal should not be allowed by use of special, peculiar terms or conditions not made in good faith. . . .) (emphasis added)); Coastal Bay Golf Club, Inc. v. Holbein, 231 So.2d 854, 858 (Fla.Dist.Ct.App.1970) (One offer to purchase matches another only if the essential terms of the offers are identical.) (emphasis added) (internal citations omitted); Northwest Television Club, Inc. v. Gross Seattle, Inc., 96 Wash.2d 973, 634 P.2d 837, 840 (1981) ([A]n acceptance of an offer must always be identical with the terms of the offer, or there is no meeting of the minds and no contract. A purported acceptance that changed the terms of an offer in any material respect may operate as a counteroffer. . . .) (emphasis added); Matson v. Emory, 36 Wash.App. 681, 676 P.2d 1029, 1031, 1033 (1984) (holding that the exercise of a preemptive right constitutes a counter-offer, not an acceptance, when the offer differs materially from the triggering offer) (emphasis added); John D. Stump & Assoc., Inc. v. Cunningham Mem'l Park, Inc., 187 W.Va. 438, 419 S.E.2d 699, 705 (1992) ([W]here the acceptance of a pre-emptive rightholder varies materially from the terms of the third party's offer, it is viewed as a rejection of the seller's offer and terminates the option right.) (emphasis added). Existing Maryland law is not particularly instructive regarding the protocols for the proper exercise of a right of refusal, especially in light of the rather unique factual circumstances of this case. [12] The Court of Special Appeals, however, quoting Coastal Bay Golf Club, Inc. and Matson, in its unreported opinion in the present case held that [i]f the preemptioner wishes to exercise his rights, his offer must not vary materially from the offer received by the landowner. (emphasis in original). Reported Maryland cases, at least in passing, have commented upon the contents of the purported exercise of a right of first refusal. In Ferrero Construction Co., for example, while outlining the factual background of the case, the Court stated that the preemptioner submitted a contract that in its essential terms conformed to the third party's offer. 311 Md. at 563, 536 A.2d at 1138 (emphasis added). The primary dispute in Ferrero Construction Co., however, involved not the contents of the preemptioner's exercise of its right of first refusal, but rather whether the preemptive right violated the Rule Against Perpetuities. Thus, while Maryland requires generally the literal matching of terms in cases involving the formation of binding contracts, the cases focusing specifically on rights of first refusal are ambiguous at best in this regard.