Braunstein v. McCrory Stores Corp., 68 N.Y.2d 790 (1986)
Under UCC § 2-205, an offer in a signed writing is not irrevocable for lack of consideration unless its terms give explicit assurance that it will be held open; a “non-exclusive” right to purchase does not constitute such assurance and renders the offer revocable.
Summary
Braunstein, the sponsor of a cooperative conversion, offered tenants a 30-day non-exclusive right to purchase their apartments at a lower price. Before the tenant, McCrory Stores, attempted to accept, Braunstein orally withdrew the offer. McCrory then tried to accept the original offer. The court held that the offer was revocable because it lacked the assurance required by UCC § 2-205 to be irrevocable without consideration, explicitly granting a “non-exclusive” right to purchase. The court reversed the lower court rulings and granted summary judgment dismissing the tenant’s complaint.
Facts
Braunstein, as the sponsor, offered an offering plan to convert a residential building to cooperative ownership.
The sixteenth amendment to the plan, dated April 14, 1981, increased purchase prices but granted tenants a 30-day non-exclusive right to purchase their apartments at the price in the twelfth amendment.
Prior to May 12, 1981, Braunstein orally withdrew the offer to McCrory Stores regarding its apartment.
On May 12, 1981, McCrory Stores attempted to accept the offer, seeking to purchase the apartment at the lower price.
Procedural History
The lower courts upheld the tenant’s position that the offer was irrevocable and that an enforceable contract existed.
The Appellate Division affirmed the lower court’s decision.
Braunstein appealed to the New York Court of Appeals.
Issue(s)
Whether the sponsor’s offer of April 14, granting a 30-day non-exclusive right to purchase, was irrevocable under UCC § 2-205, despite the lack of consideration.
Holding
No, because the offer did not give assurance that it would be held open, as required by UCC § 2-205 to be irrevocable despite the lack of consideration; the express granting of a “non-exclusive” right indicated the opposite.
Court’s Reasoning
The court applied UCC § 2-205, which states that an offer in a signed writing assuring it will be held open is not revocable for lack of consideration during the stated time.
The court emphasized that the offer was “non-exclusive,” meaning the sponsor reserved the right to sell the apartment to others during the 30-day period.
“Thus, the sponsor explicitly reserved the right to sell the tenant’s apartment to others at any time during the 30-day period — precisely the opposite of an assurance that the tenant would have the right at any time during that period to purchase the apartment for herself.”
The court determined that because the offer was revocable and withdrawn before acceptance, no contract was formed. The offer lacked the necessary assurance of remaining open, a critical element under UCC 2-205 to render an offer irrevocable without consideration. The court distinguished this situation from offers explicitly guaranteeing a period of irrevocability. The decision underscores the importance of precise language in offers, especially in commercial contexts governed by the UCC, to clearly establish the offeror’s intent regarding revocability. This case provides a practical guide for drafting offers, emphasizing that the absence of an explicit guarantee of irrevocability, coupled with language suggesting the offeror’s right to sell to others, will likely render the offer revocable even within a stated time period. The case highlights a relatively narrow interpretation of what constitutes an ‘assurance’ of irrevocability under UCC 2-205. It suggests that drafters must be explicit and unambiguous when intending to create a firm offer that cannot be revoked for a stated period, even without separate consideration.