Marchiondo v. Scheck: The Unilateral Contract Case Explained

Marchiondo v. Scheck is a leading New Mexico contract case about whether an offeror can revoke a unilateral contract offer after the other party has begun performing. The dispute arose from a real estate broker’s effort to earn a commission, but the court’s reasoning reaches beyond brokerage agreements. It illustrates an important contract principle: in some circumstances, beginning the requested performance makes an offer temporarily irrevocable, giving the performing party a fair chance to complete the job.

What Marchiondo v. Scheck Decided

In Marchiondo v. Scheck, the New Mexico Supreme Court considered a broker’s claim to a commission after the property owner attempted to withdraw the offer to pay one. The court applied a rule associated with unilateral contracts: when an offeree begins the requested performance, the offeror may become temporarily unable to revoke the offer before the offeree has a reasonable opportunity to finish.

The case is commonly cited for connecting the start of performance with an implied option contract. An option contract, in this setting, is a separate commitment that keeps the original offer open for a period of time. It does not necessarily mean the performer has completed the main contract or earned payment immediately. Rather, it can prevent the offeror from defeating the opportunity to complete the requested performance through a last-minute revocation.

The decision is often discussed alongside Section 45 of the Restatement (Second) of Contracts, which addresses the effect of beginning performance under an offer for a unilateral contract. The key distinction is between preparation to perform and actual commencement of the requested performance.

Background: A Broker’s Commission Offer

The case involved a real estate broker, Marchiondo, and a property owner, Scheck. The owner had made an offer connected to the broker’s effort to find a buyer. The broker pursued a potential purchaser, and the dispute arose after the owner attempted to revoke the arrangement before the transaction was completed.

In a typical brokerage arrangement, an owner promises to pay a commission if the broker satisfies specified conditions, such as producing a buyer who is ready, willing, and able to purchase on the owner’s terms. The promise may be framed as a unilateral offer: the broker accepts by doing the requested work, rather than by merely promising to do it.

The legal problem was therefore not simply whether the broker and owner had discussed a commission. The court had to consider whether the offer could still be revoked after the broker had begun the performance that the offer invited. The timing mattered: if revocation was effective before performance began, the broker’s claim could fail; if performance had begun, the offer might have become temporarily irrevocable.

Unilateral Contracts and Acceptance by Performance

A contract is generally called unilateral when one party offers to pay or provide something in exchange for the other party’s performance. For example, a person may promise a reward for the return of a lost item. The recipient accepts by performing the requested act, not simply by saying, “I agree to look for it.”

That structure creates a practical problem. If the offeror can revoke freely at any moment before the requested performance is complete, the offeree may invest substantial time and effort only to lose the opportunity just before finishing. Courts and contract rules address that concern by limiting revocation in certain circumstances once performance has started.

Under the approach associated with Marchiondo and Restatement Section 45, the start of the invited performance can create an option contract. The original unilateral offer remains open long enough to allow the offeree a reasonable opportunity to complete the performance. The offeree generally must still finish the requested act to earn the promised exchange, unless the offer’s terms or another legal rule provide otherwise.

The Court’s Reasoning

The New Mexico Supreme Court treated the broker’s commencement of performance as legally significant. The court’s approach recognized that a unilateral offer can invite action without requiring an advance promise from the person who will perform. Once that person begins the requested performance, allowing an unrestricted revocation could undermine the offer itself.

The reasoning balances two interests. An offeror ordinarily has the power to withdraw an offer before it is accepted. At the same time, an offeree who has started the very performance requested by the offeror has a stronger claim to a fair chance to complete it. The implied option contract addresses that tension without automatically treating incomplete work as full acceptance.

This distinction is important: starting performance may make the offer temporarily irrevocable, but it does not automatically establish that every condition for payment has been met. A broker may still need to satisfy the commission agreement’s requirements, and disputes may remain about whether the buyer was qualified, whether the proposed terms matched the owner’s conditions, or whether the broker was the procuring cause of the sale.

Why the Case Matters for Contract Law

It Clarifies the Effect of Beginning Performance

The case is useful in explaining why “beginning performance” can matter before a contract has been fully performed. In an ordinary bilateral contract, acceptance often occurs through a return promise. In a unilateral contract, acceptance usually occurs through conduct. A rule that protects an offeree after performance starts helps prevent an offeror from revoking at a point that would make the invited performance futile.

It Helps Distinguish Performance from Preparation

Not every step taken in anticipation of an offer counts as beginning performance. Researching a job, arranging equipment, or making preliminary plans may be preparation rather than the performance the offer requested. The distinction depends on the wording of the offer and the nature of the action taken.

For example, if an offer promises a reward for delivering a missing dog, searching for the dog may be the beginning of performance under some circumstances, while buying supplies in advance may be only preparation. In a broker setting, merely discussing a listing may differ from actively carrying out the requested work. Courts examine the facts and the offer’s terms rather than applying a universal checklist.

It Connects Contract Doctrine to Real-World Reliance

The rule also reflects a practical concern: people often incur costs or invest effort while responding to offers. A limited period of irrevocability can protect the opportunity to complete the requested task without guaranteeing payment for unfinished work. That balance helps explain the case’s enduring role in contract-law discussions.

Marchiondo v. Scheck and Restatement Section 45

Restatement (Second) of Contracts Section 45 states a general rule for offers that invite acceptance only by performance. When the offeree tenders or begins the invited performance, an option contract is created. The offeror’s duty under the main contract remains conditional on completion or tender of the performance, but the offer is protected against revocation during the period allowed by the rule.

Marchiondo v. Scheck is frequently taught as an early and influential case supporting this approach. It is best understood as part of a broader development in contract law, not as a rule that every act of preparation makes an offer irrevocable. The specific language of the offer, the type of performance requested, and the timing of the parties’ actions all remain important.

The case also illustrates the difference between an option contract and the underlying unilateral contract. The option contract concerns whether the offer stays open. The underlying contract concerns whether the offeree has completed the act required to earn the promised payment. The two questions are related, but they are not identical.

Practical Examples of the Rule

These examples are illustrative, not automatic outcomes. A court would consider the precise wording, communications, conduct, and applicable state law. Contract terms can also define when an offer may be withdrawn or what event earns a commission, subject to applicable legal limits.

Limits and Common Misunderstandings

Beginning performance is not always enough to earn payment. In a unilateral contract, the promised exchange is commonly due only when the requested performance is completed. The option-contract rule protects the chance to finish; it does not necessarily convert partial performance into full performance.

Preparation alone may not trigger the rule. A person who has only made plans or incurred preliminary expenses may not have begun the performance invited by the offer. The boundary can be fact-specific, which makes clear contract language especially valuable.

The case does not make every offer irrevocable. Many offers remain revocable until accepted, unless a recognized exception applies, such as an option supported by consideration, a firm offer under the Uniform Commercial Code, or a rule protecting an offeree who has begun performance under a unilateral offer.

Broker commission claims involve additional issues. A commission agreement may require the broker to produce a ready, willing, and able buyer, obtain a signed offer, or satisfy another stated condition. Whether the owner’s revocation was ineffective is only one part of the analysis. The contract’s exact language and the governing state’s brokerage law matter.

How to Apply the Case to a Contract Dispute

Anyone analyzing a possible unilateral contract dispute can start with a few focused questions:

• What did the offer require? Identify the precise act or result that would earn the promised payment.
• How was acceptance supposed to occur? Determine whether the offer invited a return promise, performance, or either method.
• When did the offeree act? Establish whether performance began before the offeror communicated revocation.
• Was the action performance or preparation? Compare what the offeree did with the conduct the offer requested.
• Was the performance completed? Separate the question of temporary irrevocability from the question of whether payment became due.
• Which law applies? State statutes, later court decisions, and the contract’s terms can affect the result.

Written records can be important. Offers, listing agreements, emails, texts, advertisements, and dated records of work may help show what was promised and when performance began. Because real estate commission rules vary by state, a particular dispute may require advice from a licensed attorney familiar with local law.

Key Takeaway

Marchiondo v. Scheck is a landmark unilateral contract case because it highlights the legal significance of beginning the performance an offer requests. Under the principle associated with the decision, that step may create an implied option contract, temporarily preventing revocation and giving the performer a reasonable opportunity to finish. The rule protects a meaningful chance to complete the job, while leaving the offer’s conditions and the question of full performance central to whether payment is ultimately owed.

Sources and Further Reading

• New Mexico Supreme Court opinions — court decisions and state case-law materials.
• Cornell Legal Information Institute: Unilateral Contract — an accessible overview of acceptance by performance.
• Cornell Legal Information Institute: Option Contract — background on agreements that keep offers open.
• American Law Institute: Restatement of the Law, Contracts — information about the Restatement governing contract principles, including Section 45.