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A Better Partnership
July 08, 2015

MSC: E-mail Requesting Increased Settlement Offer is Not Itself an Offer

In Bank of New York Mellon v Jaafar, No. 150957, the Michigan Supreme Court reversed the judgment of the Court of Appeals and found that an e-mail from Plaintiff’s counsel sent to Defendant’s Counsel requesting an increased settlement offer was not itself an offer. Instead, the Defendant’s response agreeing to raise its previous offer constituted the actual offer for contract purposes. Because this offer was never accepted, the parties were not bound to it.
Plaintiff, Bank of New York Mellon, filed a complaint against Defendants, Jaafar K. Jaafar and Badia Jaafar, for judicial foreclosure of real property because Defendants had defaulted on their mortgage. In the course of negotiating a settlement, Plaintiff’s counsel asked Defendant’s counsel, “Would your client be willing to increase the offer by $5k [to $265,000]? Please advise me of your client’s decision.” Defendant’s counsel responded, “yes” and later asked if the $265,000 had been confirmed. Both the trial court and the Court of Appeals held that Plaintiff’s request for an additional $5,000 was a valid offer, which Defendant accepted, creating a valid contract for a settlement agreement.
Like the Court of Appeals’ dissenting opinion, the Michigan Supreme Court found that Plaintiff’s e-mail did not create a new and valid offer; rather, it was a request for Defendant to make a new offer. Defendant’s “yes” response was not an acceptance of an offer, but a statement that their own offer was renewed at $265,000. Because this was a new offer that was not accepted by Plaintiff, the Court held that there was no settlement reached, and remanded the case to the trial court for further proceedings.

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