‘Second thoughts’ email means offer was revoked

There is no magic phrase that has to be used in order to withdraw a settlement agreement, the North Carolina Business Court ruled earlier this month.

In fact, a client merely having “second thoughts” about a proposed deal can be enough to scuttle the arrangement.

In Baker v. Bowden, the plaintiff asked Business Court Judge Michael Robinson to enforce a settlement agreement he believed had been reached in an underlying trademark dispute. However, Robinson determined that an email sent by the defendant’s attorney saying his client was having “second thoughts” about the proposed settlement was sufficient to establish that the proposed deal had been revoked.

“[R]evocation does not require an explicit statement that the offer is revoked—a valid revocation is effected by communicating a manifestation of the offeror’s unwillingness to enter into the proposed contract,” Robinson said.

Robinson’s April 3 ruling awarded summary judgment to the defendant on the question of whether the settlement agreement was enforceable.

“Second thoughts”

The underlying dispute in Baker stems from plaintiff Robert Baker’s contention that the name of Timothy Bowden’s business infringes on Baker’s trademark. Both men run lawnmower repair businesses, which have similar names.

Baker’s company, “The Lawnmower Medic,” operates in Stokes County. Bowden’s Durham-based business operates under the name “Mobile Lawnmower Medic.”

Lawyers for the two men began trading emails in 2016, seeking to work out a settlement arrangement.

By Jan. 3, 2017, the two sides appeared to be heading toward a deal.

The proposed arrangement would require Bowden to transition to a new business name within a year. He would also be required to maintain a neutral landing page website that redirects traffic to the two respective businesses. Bowden would also be required to pay Baker $3,000 for the alleged infringement.

But on Jan. 4, court records say Baker’s attorney, Clemmons-based solo practitioner Norman Sloan, wrote to say that his client wanted Jan. 9 to consider the terms of the deal. Less than an hour later, Harlow responded to say that the settlement agreement needed to be in writing.

The next day, Harlow wrote to say Bowden was having “second thoughts” about the proposed agreement. Sloan responded to say his client accepted the offer.

Court records say Harlow followed up to say again that Bowden was having second thoughts and that the offer was withdrawn.

No contract

When the case reached the Business Court, Robinson noted that a valid contract requires assent, mutuality of obligation and definite terms. Those criteria were not met in the proposed settlement agreement in Baker because Bowden’s attorney had revoked the offer.

Robinson noted that the Restatement (Second) of Contracts says that the word “revoke” is not essential to a revocation. “Any clear manifestation of unwillingness to enter into the proposed bargain is sufficient,” Robinson said, quoting the Restatement.

The “second thoughts” email was just such a manifestation of unwillingness to enter the bargain, Robinson said.

That said, the underlying trademark dispute will proceed unless the two sides agree to the terms of a new settlement.

Sloan could not be reached for comment.

Harlow said he was pleased with Robinson’s “thorough” decision. He added that part of the problem with the settlement agreement was that his client was under “very difficult” time constraints because of deadlines in the underlying trademark dispute that could not be extended any further. That would have made it difficult to get the agreement worked out in writing before those deadlines expired, Harlow said.

The 14-page opinion is Baker v. Bowden (Lawyers Weekly No. 020-027-17). An opinion digest is available at nclawyersweekly.com.

Follow Jeff Jeffrey on Twitter @NCLWJeffrey