OPINION OF THE COURT
The core issue presented on this appeal is whether the offer of the plaintiff bidder, which was submitted in an
Defendant Korea Tungsten Mining Company (KTM) was the owner of a certain parcel of real estate located in midtown Manhattan. KTM advertised the sale of this property in several prominent newspapers indicating that only “sealed written bids” would be acceptеd. The property would be awarded to the highest bidder and all bids were to be postmarked no later than November 30, 1979, with the opening of bids scheduled for one day later. The minimum upset price was $500,000.
A total of 14 bids were submitted. Defendant Nova-Park (NOVA), the successful bidder, bid $750,000, “on an all cash basis”. Plaintiff submitted an “alternative” bid, as follows: “The total price of Five hundred and Fifty-six Thousand dollars ($556,000), and/or * * * one dollar ($1.00) more than the highest bidding price you have received for the above property.”
After one adjournment, the bids were opened on December. 4, and both plaintiff and NOVA claimed that it was the successful bidder. Counsel for KTM was unsure as to who had submitted the highest bid. In any event, counsel made “no written memoranda or notations indicating any acceptance of either bid”. While KTM weighed this dilemma, plaintiff and NOVA each forwarded a required $10,000 deposit to the attorney for KTM. A transmittal letter, dated December 5, 1979, accompanying plaintiff’s deposit, indicated that these funds were to be hеld in escrow by KTM’s counsel “pending the signing of a contract which is satisfactory to both parties in their discretion” (italics supplied). This letter also proposed that a contract be signed on or before December 31 and requested a return of the deposit if a contract was not signed.
On December 13, KTM’s counsel rejected plaintiff’s bid and returned the depоsit. KTM determined that the “alternative bid did not constitute a firm specific bid at all, and therefore, is not the highest bid”. Over two months later the property was sold to defendant NOVA.
Initially, plaintiff would have us conclude that on the day of the opening of the bids KTM accepted plaintiff’s offer and, therefore, a binding and enforceable contract for the sale of this real property arose between these parties. The facts of this case do not support this assertion and we do not conclude that a contract was formed. The exchange of correspondence between these parties and their actions do not evidence a clear intent to enter into a contractual relationship. Immediately after the bids were opened, counsel for KTM stated that no written notations were made indicating acceptance of either bid. Thereafter, plaintiff’s letter of transmittal, forwarded one day after the bids were opened, succinctly confirmed that no binding contract was entered into and that further negotiations were contemplated. As this court has said on a prior occasiоn when considering an action for the specific performance of a contract for a 99-year lease of real property: “[Wjhen all the essential terms and conditions of an agreement have been set forth in informal written memoranda and all that remains is their translation into a more formal document, such an agreement will be capable of specific performance” (Brause v Goldman,
Here, however, all the essential terms and conditions have not been memorialized in the informal writings between plaintiff and defendant KTM. Plaintiff’s bid was not accepted and, thus, there was no mutual assent as to the purchase price for this rеal property. In this posture there certainly was not, nor could there have been, a complete meeting of the minds. “[Wjhen the parties have clearly expressed an intention not to be bound until their preliminary negotiations have culminated in the execution of a formal contract, they cannot be held until that event has
The- cumulative effect of the correspondence and conduct of these parties can only be categorized as indicative of an intent to conduct further negotiations. Since no formal contract was subsequently entered into, no binding legal relationship was ever established.
Significantly, the actions of defendant KTM do not indicate a clear and unequivocal acceptance, as indeed they must, in order to bind it to the terms of the offer (9 NY Jur, Contracts, §41). The solicitation of bids, through advertising and other media, constitutes merely a request for an offer. Once offers are tendered, the seller has the optiоn to accept or reject any or all of them. As a leading commentator has aptly stated: “Often tenders or bids are advertised for by public corporations, municipalities * * * or private corporations. The rules governing such bidding are analogous to the rules governing auction sales. That is, an ordinary advertisеment for bids or tenders is not itself an offer but the bid or tender is an offer which creates no right until accepted.” (1 Williston, Contracts [3d ed], § 31.)
In a similar vein, Professor Corbin had this to say:
“When an auctioneer presents an article for sale at auction and asks for bids, he is ordinarily not making an operative offer and creates no power of acceptanсe. Instead, he is asking for offers to be made to him; and the bids made in response thereto are themselves offers that can be revoked by the bidders prior to an acceptance by the auctioneer. This is true even though the seller or his representative has issued advertisements or made other statements that thе article will be sold to the highest bidder, or is offered for sale to the highest bidder. Such statements are merely preliminary negotiation, not intended * * * to affect legal relations. When such is the case, the seller or his representative is as free to reject the bids, highest to lowest, as are the bidders to withdraw them * * *
“The accеptance of a bid at auction is commonly signified by the fall of the hammer or by the auctioneer’s announcement ‘Sold.’ All that is necessary is that the auctioneer
Based on the facts before us it cannot be said that these parties intended to be bound by the bid submitted on behalf of the plaintiff. Any such intention is solely that of the plaintiff and this unilateral, subjective manifestation cannot be elevated to the level of an enforceable contract. As Judge Learned Hand has stated: “A contract has, strictly speaking, nothing to do with the personal or individual intent of the parties. A contract is an obligation attached by merе force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent.” (Hotchkiss v National City Bank of N.Y., 200 F 287, 293, affd 201 F 664, affd
Under the circumstances, the assertions of the plaintiff may constitute, at best, an oral agreement for the sale of real property. Ordinarily, an agreement of this nature would not survive the defense of the Statute of Frauds. (General Obligations Law, § 5-703, subd 2.)
In an attempt, however, to remove the restrictiоns of this statute plaintiff argues that KTM’s acceptance and retention of the $10,000 deposit for a period of nine days constituted sufficient part performance, to justify specific performance, of this oral contract. This part performance, however, must be “unequivocally referable” to the purрorted agreement in order to remove the proscription of
In any event the Court of Appeals has previously held that the payment of the consideration, even in full, is not, standing alone, such part performance as would require the enforcement of an oral contract to sеll realty. “[A]s said by a recent author, ‘by an unbroken current of authorities, running through many years, it is settled too firmly for question that payment, even to the whole amount of the purchase money, is not to be deemed such part performance as to justify a court of equity in enforcing the contract.’ (Browne on Statute of Frauds [5th ed.], § 461) ” (Cooley v Lobdell,
More recently, two other appellate courts have reached similar conclusion. In Osta v Jarrett (
In Manyon v Graser (
As previously noted, a bid is nothing more than an offer. No legal rights are created until the offer has been accepted. Before an offer can be accepted, its terms must be “definite and certain”. (9 NY Jur, Contracts, § 21.) The “alternative bid”, as submitted by the plaintiff, failed to meet this criterion and, therefore, did not constitute a valid offer. The plaintiff's efforts to avoid the basic rules of offer and acceptance by use of the bid of one dollar over the highest bidder raises an apparently novel issue not previously encountered by this court.
The viability of the bid, as submitted, depended upon circumstances wholly independent from the actions of the offeror. This bid hinged upon other offers submitted. The plaintiff’s offer was not capable of determination in any precise manner (see 1 Corbin, Contracts, § 97). The practice attempted to be engaged in by plaintiff is fraught with mischief. The touchstone of the bidding process is the competition for the property being offered for sale. It is this spirit which regulates and establishes the price to be paid. If the course as pursued by this plaintiff were authorized, this procedure would all but eliminate sealed competitive bidding. There would be nothing to prevent each successive offeror from submitting an alternative bid which was a minimal amount greater than the highest bid previously considered.
To permit such practice to prevail wоuld cause havoc with all parts of public and private commerce. Almost all public, and many private, improvements are the product of the highest bidder process. This is a well-recognized technique and is in the best interest of all concerned. The purpose of competitive bidding is to give every qualified person an opportunity to bid upon the same material items, and on the same specifications and conditions. A bid is an offer to perform a contract at a certain price. The plaintiff’s attempt to circumvent this established practice will not be countenanced.
Accordingly, the order of the Supremе Court, New York County (Schwartz, J.), entered on October 1,1980, which denied defendant’s motion for summary judgment, should be reversed, on the law, with costs, and the motion for summary judgment dismissing the complaint, should be granted.
Carro, Lupiano, Silverman, and Bloom, JJ., concur.