Opinion ID: 624826
Heading Depth: 3
Heading Rank: 1

Heading: Valid Offer

Text: In Illinois, the test for an offer is whether it induces a reasonable belief in the recipient that he can, by accepting, bind the sender. Boomer v. AT & T Corp., 309 F.3d 404, 415 (7th Cir.2002), quoting McCarty v. Verson Allsteel Press Co., 89 Ill.App.3d 498, 44 Ill.Dec. 570, 411 N.E.2d 936, 943 (1980); see also Restatement (Second) of Contracts § 24 (1981) (An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.). To determine whether the TPP made a definite (though conditional) offer of permanent modification, we examine the language of the agreement itself and the surrounding circumstances. See Restatement (Second) of Contracts § 26, cmts. a & c (1981), citing R.E. Crummer & Co. v. Nuveen, 147 F.2d 3, 5 (7th Cir.1945). Wells Fargo contends that the TPP was not an enforceable offer to permanently modify Wigod's mortgage because it was conditioned on Wells Fargo's further review of her financial information to ensure she qualified under HAMP. Under contract law principles, when some further act of the purported offeror is necessary, the purported offeree has no power to create contractual relations, and there is as yet no operative offer. 1 Joseph M. Perillo, Corbin on Contracts § 1.11, at 31 (rev. ed. 1993) (hereinafter  Corbin on Contracts (rev. ed.)), citing Bank of Benton v. Cogdill, 118 Ill.App.3d 280, 73 Ill.Dec. 871, 454 N.E.2d 1120, 1125-26 (1983). Thus, a person can prevent his submission from being treated as an offer by [using] suitable language conditioning the formation of a contract on some further step, such as approval by corporate headquarters. Architectural Metal Systems, Inc. v. Consolidated Systems, Inc., 58 F.3d 1227, 1230 (7th Cir.1995) (Illinois law). Wells Fargo contends that the TPP did just that by making a permanent modification expressly contingent on the bank taking some later action. That is not a reasonable reading of the TPP. Certainly, when the promisor conditions a promise on his own future action or approval, there is no binding offer. But when the promise is conditioned on the performance of some act by the promisee or a third party, there can be a valid offer. See 1 Richard A. Lord, Williston on Contracts § 4:27 (4th ed. 2011) (hereinafter  Williston on Contracts ) ([A] condition of subsequent approval by the promisor in the promisor's sole discretion gives rise to no obligation.... However, the mere fact that an offer or agreement is subject to events not within the promisor's control ... will not render the agreement illusory.); compare McCarty, 44 Ill.Dec. 570, 411 N.E.2d at 942 (An offer is an act on the part of one person giving another person the legal power of creating the obligation called a contract.), with Village of South Elgin v. Waste Management of Illinois, Inc., 348 Ill.App.3d 929, 284 Ill.Dec. 868, 810 N.E.2d 658, 672 (2004) (A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.), quoting Restatement (Second) of Contracts § 26 (1981). Here the TPP spelled out two conditions precedent to Wells Fargo's obligation to offer a permanent modification: Wigod had to comply with the requirements of the trial plan, and her financial information had to remain true and accurate. But these were conditions to be satisfied by the promisee (Wigod) rather than conditions requiring further manifestation of assent by the promisor (Wells Fargo). These conditions were therefore consistent with treating the TPP as an offer for permanent modification. Wells Fargo insists that its obligation to modify Wigod's mortgage was also contingent on its determination, after the trial period began, that she qualified under HAMP guidelines. That theory conflicts with the plain terms of the TPP. At the beginning, when Wigod received the unsigned TPP, she had to furnish Wells Fargo with documents to permit verification of ... [her] income ... to determine whether [she] qualif[ied] for the offer. TPP ¶ 2. The TPP then provided: I understand that after I sign and return two copies of this Plan to the Lender, the Lender will send me a signed copy of this Plan if I qualify for the Offer or will send me written notice that I do not qualify for the offer. TPP ¶ 2 (emphasis added). Wigod signed two copies of the Plan on May 29, 2009, and returned them along with additional financial documentation to Wells Fargo. Under the terms of the TPP Agreement, then, that moment was Wells Fargo's opportunity to determine whether Wigod qualified. If she did not, it could have and should have denied her a modification on that basis. Instead, Wells Fargo countersigned on June 4, 2009 and mailed a copy to Wigod with a letter congratulating her on her approval for a trial modification. In so doing, Wells Fargo communicated to Wigod that she qualified for HAMP and would receive a permanent Loan Modification Agreement after the trial period, provided she was in compliance with this Loan Trial Period and [her] representations... continue[d] to be true in all material respects. TPP ¶ 1. In more abstract terms, then, when Wells Fargo executed the TPP, its terms included a unilateral offer to modify Wigod's loan conditioned on her compliance with the stated terms of the bargain. The test for an offer is whether it induces a reasonable belief in the [offeree] that he can, by accepting, bind the [offeror]. Architectural Metal Systems, 58 F.3d at 1229, citing McCarty, 44 Ill.Dec. 570, 411 N.E.2d at 943; see also 1 Williston on Contracts § 4.10 (offer existed if the purported offeree reasonably [could] have supposed that by acting in accordance with it a contract could be concluded). Here a reasonable person in Wigod's position would read the TPP as a definite offer to provide a permanent modification that she could accept so long as she satisfied the conditions. This is so notwithstanding the qualifying language in section 2 of the TPP. An acknowledgment in that section provided: I understand that the Plan is not a modification of the Loan Documents and that the Loan Documents will not be modified unless and until (i) I meet all of the conditions required for modification, (ii) I receive a fully executed copy of the Modification Agreement, and (iii) the Modification Effective Date has passed. TPP § 2.G. [6] According to Wells Fargo, this provision meant that all of its obligations to Wigod terminated if Wells Fargo itself chose not to deliver a fully executed TPP and `Modification Agreement' by November 1, 2009. In other words, Wells Fargo argues that its obligation to send Wigod a permanent Modification Agreement was triggered only if and when it actually sent Wigod a Modification Agreement. Wells Fargo's proposed reading of section 2 would nullify other express provisions of the TPP Agreement. Specifically, it would nullify Wells Fargo's obligation to send [Wigod] a Modification Agreement if she compl[ied] with the requirements of the TPP and if her representations ... continue to be true in all material respects. TPP § 3. Under Wells Fargo's theory, it could simply refuse to send the Modification Agreement for any reason whatsoeverinterest rates went up, the economy soured, it just didn't like Wigod and there would still be no breach. Under this reading, a borrower who did all the TPP required of her would be entitled to a permanent modification only when the bank exercised its unbridled discretion to put a Modification Agreement in the mail. In short, Wells Fargo's interpretation of the qualifying language in section 2 turns an otherwise straightforward offer into an illusion. The more natural interpretation is to read the provision as saying that no permanent modification existed unless and until Wigod (i) met all conditions, (ii) Wells Fargo executed the Modification Agreement, and (iii) the effective modification date passed. Before these conditions were met, the loan documents remained unmodified and in force, but under paragraph 1 and section 3 of the TPP, Wells Fargo still had an obligation to offer Wigod a permanent modification once she satisfied all her obligations under the agreement. This interpretation follows from the plain and ordinary meaning of the contract language stating that the Plan is not a modification ... unless and until the conditions precedent were fulfilled. TPP § 2.G. And, unlike Wells Fargo's reading, it gives full effect to all of the TPP's provisions. See McHenry Savings Bank v. Autoworks of Wauconda, Inc., 399 Ill. App.3d 104, 338 Ill.Dec. 671, 924 N.E.2d 1197, 1205 (2010) (If possible we must interpret a contract in a manner that gives effect to all of the contract's provisions.), citing Bank of America Nat'l Trust & Savings Ass'n v. Schulson, 305 Ill.App.3d 941, 239 Ill.Dec. 462, 714 N.E.2d 20, 24 (1999). Once Wells Fargo signed the TPP Agreement and returned it to Wigod, an objectively reasonable person would construe it as an offer to provide a permanent modification agreement if she fulfilled its conditions.