Background
After a vehicle collision, the plaintiff, an insurance company, and the defendant, an injured driver, exchanged letters regarding a settlement. The driver proposed a settlement in exchange for the insurance policy limits without pursuing the driver of the other vehicle. The insurance company responded with a letter offering to pay the policy limits but requiring a release that also covered the other driver. The driver’s attorney rejected this response as a rejection of the original offer. The insurance company sued for breach of contract, but the district court dismissed the case, ruling no contract was formed.
The court’s reasoning
The court applied Missouri law, which requires a meeting of the minds through a definite offer and an unequivocal, mirror-image acceptance. The court found that the insurance company’s response included an additional term releasing the other driver from liability, which made it a counteroffer rather than an acceptance. Since the driver never accepted this counteroffer, no enforceable agreement existed. The court also rejected arguments regarding the district court’s consideration of attachments and the failure to grant leave to amend, finding no reversible error.
A contract does not exist without a definite offer and a mirror-image acceptance.
Stickler v. McGinnis, 649 S.W.3d 38, 44 (Mo. Ct. App. 2022)
What it means going forward
Insurance companies and other parties must ensure that settlement responses strictly mirror the terms of an original offer to form a binding contract. Adding new conditions, even seemingly minor ones like expanding the scope of a release, will likely be treated as a counteroffer that requires a new acceptance to be enforceable.
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