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Mar 21, 2016

Practice Tip: Like Milk or Eggs, Your Settlement Offer Needs an Expiration Date

ABSTRACT: In Missouri, a settlement offer that does not include time limits or a condition that it be accepted before the court rules on summary judgment, remains open for a "reasonable period of time". Even after summary judgment has been granted, the losing party can accept an open settlement offer, reasonably soon after the offer was made.

In Woods v. Cory[1], plaintiffs filed an action alleging injuries from an auto accident.  Defendant moved for summary judgment and argued the motion on February 18, 2003. The court ordered that if the case was not settled by March 5, 2003, it would rule on the pending motion.  Three days later, plaintiffs’ attorney asked for a settlement offer from Defendant.  On February 25, 2003 Defendant faxed a written offer of $35,000 to settle.  The letter contained no time limit for acceptance of the offer.

On February 28, 2003, the court entered summary judgment in favor of defendants on all claims.  All parties received a copy of the court’s order on March 3, 2003.  On March 12, 2003, plaintiffs’ attorney accepted the defendant’s settlement offer.  Later that same day, defendant’s counsel faxed a letter stating defendant was no longer interested in settlement.

Plaintiffs’ counsel moved to enforce the settlement.  In enforcing the settlement, the court explained the basics of contract law, as applied to settlements:

Inherent in the offeror's power as master of his offer is the power to insist that the offer may terminate upon the occurrence of a condition and that it may only be accepted in accordance with the conditions stated by it.  When an offer is made and no time limit is specified as to the time to accept the offer and the duration of the power of acceptance is not stated, then it is deemed that the offer is open for a reasonable period of time.  The resolution of what is a reasonable time is a question of fact to be determined by the trier of fact.  There is no contract until acceptance of an offer is communicated to the offeror.  An offeror may withdraw his offer at any time before acceptance and communication of that fact to him.  To be effective, revocation of an offer must be communicated to the offeree before he has accepted.

Woods, 192 S.W.3d at 459 (internal citations omitted).  The court held that because defendant’s offer to settle did not contain any condition that it be accepted before the trial court ruled on Defendant’s pending motion or that it be accepted within any particular period of time, acceptance occurred on March 12, 2003.  Thus, the court enforced the parties’ settlement agreement.



[1] 192 S.W.3d 450 (Mo.App.S.D. 2006).