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Contracts Treatise
Table of Contents
Contracts Outline
Introduction and Definitions
Contract law in the United States
Contract formation
Intention to Bind
Formal requisites
Mailbox rule
Mirror image rule
Invitation to deal
Firm offer
Collateral contract
Uniform Commercial Code
Uniform Commercial Code
Course of dealing
Course of performance
UCC-1 financing statement
Uniform Commercial Code adoption
Defenses against formation
Lack of capacity
Undue influence
Illusory promise
Statute of frauds
Non est factum
Contract interpretation
Governing law
Construction and Operation
Parol evidence rule
Contract of adhesion
Integration clause
Contra proferentem
Excuses for non-performance
Frustration of purpose
Unclean hands
Accord and satisfaction
Rights of third parties
Privity of contract
Third-party beneficiary
Performance or Breach
Necessity of performance
Sufficiency of performance
Anticipatory repudiation
Exclusion clause
Efficient breach
Fundamental breach
Termination and rescission
Abrogation and rescission
Subsequent contract
Specific performance
Liquidated damages
Punitive damages
Quasi-contractual obligations
Quantum meruit
Actions in General
Parties to Action
Questions of Law and Fact
Trial and Judgment

Acceptance is a promise or act on the part of an offeree indicating a willingness to be bound by the terms and conditions contained in an offer. Also, the acknowledgment of the drawee that binds the drawee to the terms of a draft.

Test of acceptance[edit | edit source]

For the acceptance, the essential requirement is that the parties had each from a subjective perspective engaged in conduct manifesting their assent. Under this meeting of the minds theory of contract, a party could resist a claim of breach by proving that he had not be intended to be bound by the agreement, only if it appeared subjectively that he had so intended. This is unsatisfactory, as one party has no way to know another's undisclosed intentions. One party can only act upon what the other party reveals objectively (Lucy v Zehmer, 196 Va 493 84 S.E. 2d 516) to be his intent. Hence, an actual meeting of the minds is not required. Indeed, it has been argued that the "meeting of the minds" idea is entirely a modern error: 19th century judges spoke of "consensus ad idem" which modern teachers have wrongly translated as "meeting of minds" but actually means "agreement to the [same] thing".[1]

The requirement of an objective perspective is important in cases where a party claims that an offer was not accepted and seeks to take advantage of the performance of the other party. Here, we can apply the test of whether a reasonable bystander (a "fly on the wall") would have perceived that the party has impliedly accepted the offer by conduct.

General rules of acceptance[edit | edit source]

It must be an absolute and unqualified acceptance of all the terms of the offer: Sec.7(1). If there is any variation, even on an unimportant point, between the terms of the acceptance, there is no contract.

Communication[edit | edit source]

There are several rules dealing with the communication of acceptance:

  • The acceptance must be communicated.[2][3] Theisger LJ said in Household Fire and Carriage that "an acceptance which remains in the breast of the acceptor without being actually and by legal implication communicated to the offeror, is no binding acceptance".[4] Prior to acceptance, an offer may be withdrawn.
  • As acceptance must be communicated, the offeror cannot include an Acceptance by Silence clause. This was affirmed in Felthouse v Bindley,[5] here an uncle made an offer to buy his nephew's horse, saying that if he didn't hear anything else he would "consider the horse mine". This did not stand up in court, and it was decided there could not be acceptance by silence.
  • An exception exists in the case of unilateral contracts, in which the offeror makes an offer to the world which can be accepted by some act. A classic instance of this is the case of Carlill v Carbolic Smoke Ball Co.. [1893] 2 Q.B. 484 in which an offer was made to pay £100 to anyone who having bought the offeror's product and used it in accordance with the instructions nonetheless contracted influenza. The plaintiff who was Mrs Carlill bought the smoke ball and used it according to the instructions but she contracted influenza. She sued the Carbolic Smoke Ball Co. for £100. The court held that the inconvenience she went through by performing the act amounted to acceptance and therefore ordered £100 to be given to Mrs. Carlill. Her actions accepted the offer - there was no need to communicate acceptance. Typical cases of unilateral offers are advertisements of rewards (e.g., for the return of a lost dog).
  • An offer can only be accepted by the offeree, that is, the person to whom the offer is made.
  • An offeree is not usually bound if another person accepts the offer on their behalf without his authorisation, the exceptions to which are found in the law of agency, where an agent may have apparent or ostensible authority, or the usual authority of an agent in the particular market, even if the principal did not realise what the extent of this authority was, and someone on whose behalf an offer has been purportedly accepted may also ratify the contract within a reasonable time, binding both parties: see agent (law).
  • It may be implied from the construction of the contract that the offeror has dispensed with the requirement of communication of acceptance (called waiver of communication - which is generally implied in unilateral contracts).[6]
  • If the offer specifies a method of acceptance (such as by post or fax), acceptance must be by a method that is no less effective from the offeror's point of view than the method specified. The exact method prescribed may have to be used in some cases but probably only where the offeror has used very explicit words such as "by registered post, and by that method only".[7]
  • However, acceptance may be inferred from conduct.[8][9]

Counter-offers and correspondence[edit | edit source]

The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without modifications; if you change the offer in any way, this is a counter-offer that kills the original offer and the original offer cannot be accepted at a future time.[10]

However, a mere request for information about the terms of the offer is not a counter-offer and leaves the offer intact.[11] It may be possible to draft an enquiry such that it adds to the terms of the contract while keeping the original offer alive.

Under the Uniform Commercial Code (UCC) Sec. 2-207(1), a definite expression of acceptance or a written confirmation of an informal agreement may constitute a valid acceptance even if it states terms additional to or different from the offer or informal agreement. The additional or different terms are treated as proposals for addition into the contract under UCC Sec. 2-207(2). Between merchants, such terms become part of the contract unless:

  • a) the offer expressly limits acceptance to the terms of the offer,
  • b) material alteration of the contract results,
  • c) notification of objection to the additional/different terms are given in a reasonable time after notice of them is received.

Material is defined as anything that may cause undue hardship/surprise, or is a significant element of the contract.

If there is no contract under 2-207(1), then under UCC Sec. 2-207(3), conduct by the parties that recognize there is a contract may be sufficient to establish a contract. The terms for this contract include only those that the parties agree on and the rest via gap fillers.

Acceptance by Assent[edit | edit source]

The simplest form of offer and acceptance, viz., the offer of a promise and its acceptance by simple assent, is not applicable to the law of contracts except in the single case of contracts under seal. The reason is that in our law no promise, which is not under seal, is binding unless the promisor obtains some benefit in return for his promise, and this benefit is called "consideration." Therefore, if a man says to another, "I will give you $100." or "I will do such and such a thing for you." the other by simply assenting to the proposal without doing something in return for the promise can not create a binding contract. But if A promises B under seal that he will do a certain act or pay a certain sum, when B has assented to the proposal both are bound, and there is a contract. Until B has assented there is an offer, which is irrevocable so far as A is concerned,[12] owing to the particular form in which it was made, though it cannot bind B until he has assented to it. For a man cannot be forced to accept a benefit, though acceptance is sometimes presumed when the thing is clearly for his benefit.

Acceptance by Promise[edit | edit source]

An offer may be accepted by giving a promise, as where a person offers to pay another a certain sum if he will do something for him on a future day, and the other accepts by promising to do so according to the conditions of the offer. The promise may be either express or implied. It is express where it is proved by what the offeree said; and implied where it is proved that he so acted as to raise an inference that he had made the promise alleged. If a person sends goods to another, and the latter uses the goods, or deals with them as his, he will be liable on an implied promise to pay what the goods are worth, unless he had a right to suppose, and did suppose, that a gift was intended. The acceptance by their use raises an implied promise to pay for them.[13]

Acceptance by Act[edit | edit source]

Where the offer is made conditional on the offeree doing something, the doing of the thing required completes the agreement.[14]

"If A promises B to pay him a sum of money if he will do a particular act, and B does it, the promise thereupon becomes binding, although B at the time of the promise does not engage to do the act. In the intermediate time the obligation is inert or the promise suspended, and until the performance of the condition there is no consideration and the promise is nudum pactum; but on the performance of the condition by the promisee it is clothed with a valid consideration which relates back to the promise, and it then became obligatory. So if a reward be offered for the apprehension of a culprit or for the doing of any other lawful act, the promise when made is nudum pactum, but when any one relying upon the promised reward performs the condition this is a good consideration for the previous promise and it thereupon becomes binding on the promisor."[15]

Pothier mentions many cases in the Civil law where A promises to do something, if B will do something else. There is nothing binding on B, but when he does the act it becomes binding on A.[16] So

when a person says, "In case you choose to employ this man for a week, I will be responsible for all sums, as he shall receive, during that time and neglect to pay over to you," the party indemnified is not therefore bound to employ him, but if he do employ him, then the guaranty attaches and becomes binding on the party who gave it.[17]

So if

I say, "if you will furnish goods to a third person, I will guarantee the payment," there you are not bound to furnish them, yet if you do furnish them, in pursuance of the contract, you may sue me on my guaranty.[18]

So if a reward be offered for the apprehension of a culprit or for the doing of any other lawful act, the promise when made is nudum pactum; but when any one relying upon the promised reward performs the condition, this is a good consideration for the previous promise, and it thereupon becomes binding on the promisor.

The everyday case of a written order for goods is in point. A man mails an order for certain goods to be sent to him; he receives no reply; the first intimation that the vendor intends to accept the order is the arrival of the goods. If the order is a positive direction to send the goods, it will be enough that the vendor has done so without his having previously notified the vendee of his intention to send them, and to accept the offer. Thus, in Cooper v. Altimus,[19] C wrote to A inquiring if he had staves to sell, and A answered : "If you would let me know how much you would give I could get four thousand at $50 per thousand." C replied: "If they are rift staves and good, I will give $35 per thousand delivered at the station." A sent the staves without answering, but they were rejected by C on the ground that his last letter was an offer which should have been accepted in order to complete the contract. The court held that the letter was an order which did not call for a reply, and became obligatory on him when the staves were tendered in accordance with its terms.

Another apt illustration of the principle is where a university, in its advertisement for 1892-93, announced that applicants for admission to the law department were required to pay $50 for the first year and $40 for each successive year. Plaintiff in 1892 paid $50 and was admitted to the junior class. The catalogue for 1893-94 stated that law students in all classes were required to pay $50 a year. In 1893 plaintiff tendered $40 as the fee for admission to the senior class, which was refused, and he paid the $50 under protest. It was held that he was entitled to recover the $10. The student by entering the junior class and paying the $50 accepted defendant's offer, and no other notice was essential. It was the offer of a promise for an act. No one was obliged to accept defendant's offer; but anyone was entitled by its very terms to do so, and plaintiff having done so the contract was complete and binding on defendant. Plaintiff was not under any obligation to take the second year's course, but defendant had not required any promise from him of this kind. Defendant's offer might have said that any person entering the junior class and agreeing to take the whole course would be entitled to the stated terms, and in such a case this would have been an offer of a promise for a promise, and if no promise had been made before the withdrawal of the offer there would be no contract. But defendant chose to make its promise in consideration of plaintiff's doing something, i.e., entering the junior class and paying $50.[20]

Acceptance by Silence[edit | edit source]

Where conduct is relied upon as constituting acceptance it must be something more than mere silence, it must be silence under such circumstances as to amount to acquiescence. Consent can never be presumed from silence when the offer is not communicated to the party to whom it was intended to be made.[21] Nor can a person make another a purchaser in spite of himself by sending goods to him, and demanding the price if the latter does not go to the trouble and expense of returning them and telling him he does not want them.[22] So an offer either by word of mouth or in writing cannot be turned into an agreement simply because the person to whom it is made makes no reply,[23] and this even though the offer states that silence will be taken as consent, for the offerer cannot prescribe conditions of rejection so as to turn silence on the part of the offeree into acceptance.[24] In Felthouse v. Bindley,[25] an uncle offered by letter to buy his nephew's horse for £30 15s., adding, "if I hear no more about him I consider the horse is mine at £30 15s." No answer was returned to the letter, and it was held that there was no contract.

Circumstances may exist which will impose a contractual obligation by mere silence,[26] but such circumstances are exceptional and rare; and no legal liability can arise from the silence of the party sought to be affected, unless he was subject to a duty of speech which was neglected to the injury of the other party.

In Royal Ins. Co. v. Beatty,[27] B had two policies of insurance which expired January 6. The day before, his agent went into the office of the company and said to the clerk: "Will you renew the B policies?" The clerk made no reply, but the agent supposed he went to his books to do so. The clerk in an action for the loss of the property by fire on January 10 testified that he did not hear the request and therefore did nothing. It was held that there was no agreement to renew.

How is it possible to make a contract out of this? It is not as if one declares or states a fact in the presence of another and the other is silent. If the declaration imposed a duty of speech on peril of an inference from silence, the fact of silence might justify the inference of an admission of the truth of the declared fact. It would then be only a question of hearing which would be chiefly if not entirely for the jury. But here the utteranee was a question and not an assertion and there was no answer to the question. Instead of silence being evidence of an agreement to do the thing requested, it is evidence either that the question was not heard or that it was not intended to comply with the request. Especially is this the case when if a compliance was intended the request would have been followed by an actual doing of the thing requested. But this was not done; how then can it be said it was agreed to be done? The whole of the plaintiff's case is an unanswered request to the defendant to make a contract with the plaintiff and no further attempt by the plaintiff to obtain an answer and no actual contract made. Out of such facts it is not possible to make a legal inference of a contract. Nor do I concede that if the defendant heard plaintiff's request and made no answer an inference of assent should be made. For the hearing of a request and not answering it is as consistent, indeed, more consistent, with a dissent than an assent. If one is asked for alms on the street and hears the request but makes no answer, it certainly cannot be inferred that he intends to give them. In the present case there is no evidence that defendant heard the plaintiff's request, and without hearing there was of course no duty of speech.

There are cases holding that where a wholesale merchant sends out agents to solicit orders, if he declines to accept the orders, he must notify the persons who have given them to his agents within a reasonable time, or he will be bound.[28] In another case, a shoe manufacturer had sent to a dealer a lot of shoes, but there was a disagreement as to the terms, whereupon the former wrote: "If our terms are not satisfactory, please return the goods." The dealer not doing so within a reasonable time, it was held an acceptance of the offer."[29]

Acceptance by Signing Paper[edit | edit source]

Where a person signs a document he is not permitted to show that he did not know its terms and, in the absence of fraud, will be bound by all its provisions.[30] When an action is brought on a written agreement which is signed by defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents.[31] Again the parties may reduce their agreement to writing so that the writing constitutes the sole evidence of the agreement without signing it; and here of course there must be evidence outside the agreement itself to prove that the parties have assented to it; but if this assent be proved, then it is immaterial that one of the parties had not read the agreement and did not know its contents.

Acceptance by Accepting Paper[edit | edit source]

A written offer may be accepted by word of mouth or by acts,[32] and a contract signed by one only of the parties is binding on both if it is assented to by the other.[33]

A great number of contracts are in the present state of society made by the delivery by one of the contracting parties to the other of a document in a common form stating the terms on which the person delivering it will enter into the proposed contract. Such a form constitutes the offer of the party who tenders it. If the form is accepted without objection by the person to whom it is tendered, this person is as a general rule bound by its contents and his act amounts to an acceptance of the offer made to him, whether he reads the document or otherwise informs himself of its contents or not.[34]

This has been frequently held in the case of bills of lading and receipts issued by express companies and telegraph blanks, because persons are presumed to understand that such well-known documents contain the terms of the offer,[35] while on the other hand ordinary railroad tickets, baggage checks, or receipts of a similar character have been held not to bind the receiver to the conditions printed on them, for the reason that he may reasonably have supposed that they contained no special terms but were simply to identify himself or his property.

Nor is one bound by accepting a paper, where the conditions are not readily discernable, as where they are printed on the back of the document or in very small type or are delivered in a dark car or are ambiguous or unreasonable. And terms brought to the acceptor's notice after the agreement is complete will not bind him.[36] The reason for this is that the general offer of the carrier is to carry on the usual terms and therefore special terms must be brought to the acceptor's notice in a reasonable manner.

But beyond public agencies like common carriers the presumption of assent does not go. Thus where a collecting agency, which A had employed on several occasions, received a claim from him to collect; and it sent a receipt therefor, on the back of which was printed a clause stating that they did not guarantee clients against loss from the dishonesty of an attorney or the suspension of a bank, but the conditions were never brought to A's attention, he was held not bound by them.

The appellant calls our attention to a class of cases clearly distinguishable from the one under review. They relate to the construction placed upon the conditions in telegraph blanks, bills of lading, shipping, and express receipts, and other eommercial instruments of like description. In such it has been held that the uniform character of those instruments, and the nature of the business to which they relate, create a presumption of knowledge of the attendant conditions and limitations, or that, by using certain blank forms upon which the terms and restrictions confront the subscribing party, he is deemed to have assented to them. No such presumption exists respecting a paper purporting to be an ordinary receipt; hence the necessity of proof to establish notice to the plaintiff of the undisclosed clause of exemption from liability, which the defendant inserted in a manner not calculated to attract attention.[37]

Acceptance--by Whom[edit | edit source]

A particular offer, i. e., one made to a specified person, can be accepted by him only.[38] An offer by A to sell to B cannot be accepted by C, so as to establish an agreement with A.[39] Such an offer is not assignable.[40]

But an offer may be general, and then it may be accepted by any one, as where a carrier advertises that he will run his vehicles at certain hours, where a person offers a prize for a design for a public building,[41] or a bonus to any one who will make a certain improvement,[42] or where a bank advertises that it will redeem all bills of a certain class presented to it,[43] or in the very common case of the offer of a reward for the recovery of property or the arrest of a criminal;[44] though, as said by Pollock: "We have no special term of art for the proposal thus made by way of general request or invitation to all men to whose knowledge it comes."[45]

Such offers, made to an unascertained person or persons, cannot be turned into an agreement until they have been accepted by an ascertained person, but as soon as there is an acceptance by a person within the offer there is a binding agreement.[46]

Acceptance Must be Absolute and Unconditional[edit | edit source]

The acceptance must be absolute and unconditional.[47] If A offers B to do a certain thing and B accepts conditionally or introduces some new term into his acceptance, his answer is either an expression of a willingness to negotiate or it is in the nature of a counter-proposal on his part.[48] A counter proposal is not binding until it is accepted (and communicated) by the original proposer.[49]

Acceptance Must be Identical to Offer[edit | edit source]

The offer must be accepted exactly as it is made. The acceptance must in every respect meet and correspond with the offer, neither falling within nor going beyond the terms proposed, but exactly meeting them at all points and closing them just as they stand:[50] for there is no contract if there is a variance between the terms of the offer and the acceptance.[51] In Jordan v. Norton,[52] the defendant offered by letter to buy a mare of the plaintiff if he would warrant her quiet in harness, and the plaintiff replied that he warranted her sound and quiet in double harness. In an action for the price Baron Parke said:

"The correspondence merely amounts to this: that the defendant agrees to give twenty guineas for the mare if there is a warranty of her being sound and quiet in harness generally, but to that the plaintiff has not assented. The parties have never contracted in writing ad idem."

Like the conditional acceptance, the acceptance at variance with the terms of the offer is a counter-proposal which to bind the party by whom the original offer was made, must be accepted by him.[53] So if one makes an offer and accepts acceptance not responsive to the proposal, he is bound by the agreement thus made, and cannot fall back on his proposal in case of subsequent disagreement.[54]

Communication of Acceptance[edit | edit source]

An acceptance, which does not go beyond an uncommunicated mental determination, cannot create a binding agreement simply because the intention to accept did in fact exist.[55] If A writes to B and offers to buy B's horse and B makes up his mind to accept, but never tells A of his intention to do so, he has no remedy if A buys a horse elsewhere. In White v. Corlies[56] C wrote W, "Upon agreeing to finish the fitting up of offices 57 Broadway in two weeks from date, you can commence at once." W immediately purchased lumber for the work and began to prepare it. The next day the proposition was countermanded. It was held that the acceptance was not binding on C, as it was a mere mental determination, unaccompanied by any act indicating to C that his proposal was accepted.

A guaranty like every other contract requires notice of acceptance. It has been laid down by the Supreme Court of the United States that if the guaranty is signed by the guarantor at the request of the other party, or if the latter's agreement to accept is contemporaneous with the guaranty, or if the receipt from him of a valuable consideration, however small, is acknowledged in the guaranty, the mutual assent is proved, and the delivery of the guaranty to him or for his use completes the contract. But if the guaranty is signed by the guarantor without any previous request of the other party, and in his absence, for no consideration moving between them except future advances to be made to the principal debtor, the guaranty is in legal effect an offer or proposal on the part of the guarantor, needing an acceptance by the other party to complete the contract.[57]

But in the rule that acceptance of an offer must be communicated, the word "communicated" does not mean actual notice, for "acceptance is communicated when it is made in a manner prescribed or indicated by the offerer," put in a proper channel to reach the offerer.[58] An offer is never communicated until it is brought to the knowledge of the offeree, but it is not always necessary that an acceptance should come to the knowledge of the offerer in order to make a binding agreement.

As notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so; and I suppose there can be no doubt that where a person in an offer made by him to another person expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated mode of acceptance; and if the person making the offer expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification.[59]

The mental resolve to accept is not enough, as for example to write a letter, seal it and put it in a drawer. The law recognizes only an overt act, which may assume a variety of forms. It may be by the fall of the hammer, by words spoken, by mailing a letter, by sending a telegram, by remitting the article ordered or by the signing and delivery of a paper.

Therefore, we must look to the nature and the terms of the offer if any question should arise as to the adequacy of the method adopted to communicate the acceptance and here a distinction must be made where the offer is (a) of a promise for an act and where it is (b) of a promise for a promise.

(a) In this class of cases it is not intended that the offeree shall express his acceptance otherwise than by performance. An offer of reward for the supply of information or for the recovery of a lost article does not contemplate a notice from every person who sees the offer that he intends to search for the information or for the article. This is especially true in the case of general offers made to unascertained persons, wherein performance is expressly or impliedly indicated as a mode of acceptance. As very well said, if I advertise that I will give any one five dollars who finds and restores my dog, I do not expect that people will come to me and tell me they intend to hold me to my offer and will try to earn the five dollars. I expect them to go to work and look for the dog.[60]

The same is true of the everyday case of a written order for goods. A mails an order to B for certain goods in which B deals to be sent to him. He receives no reply; the first intimation that the vendor intends to accept the order is the arrival of the goods. Yet if the order is a positive one, it is not required that B shall first notify A that he accepts his offer and will send the goods--for A's offer is to pay him the price if he will send the goods, not promise to send them.[61]

(b) Where A offers B to do something if B will promise to do something, it is always essential that A shall be notified of B's acceptance and until such acceptance is communicated there is no agreement. But this as we have just seen does not mean that A shall have actual personal notice of the acceptance. If A sends the offer by an agent, notice of the acceptance given to that agent is sufficient; it is "communicated" to A in the eye of the law.

In a variety of ways an acceptance may be communicated without the offerer actually receiving notice of it; and it is always sufficient that the offer be accepted in the mode either expressly or impliedly required by the offerer, and if the offerer requires or suggests a mode of acceptance which turns out, so far as giving actual notice to the offerer is concerned, to be insufficient or entirely nugatory, it is the fault of the offerer and the agreement is complete.

Suppose that X sends an offer to A by messenger across a lake with a request that A, if he accepts, will at certain hour fire a gun or light a fire. Why should A suffer if a storm render the gun inaudible, or a fog intercept the light of the fire? If X sends an offer to A by messenger with a request for a written answer by bearer, is it A's fault if the letter of acceptance is stolen from the bearer's pocket? If X has asked for a verbal answer and the messenger who is told to say "yes" is struck with paralysis on the way home, it would seem unreasonable to say that no contract has been made.[62]

In Howard v. Daly,[63] plaintiff, an actress, received from defendant, the manager of a theatre, an offer to engage her for a year. She wrote a note accepting the offer, which she placed in a letter box on the door of his office. It was proved that this box was used for depositing contracts between the management and the actors. Defendant denied that he had ever received the letter.

This is immaterial. The minds of the parties met when the plaintiff complied with the usual or even occasional practice and left the acceptance in a place of deposit recognized as such by the defendant. This doctrine is analogous to that which has been adopted in the case of communication by letter or by telegraph. The principle governing these cases is that there is a concurrence of the minds of the parties upon a distinct proposition manifested by an overt act. The deposit in the box is such an act.

If one writes to another, "If you choose to employ A, I will be responsible for him," or "If you will sell goods to C, I will guarantee their payment," ordinarily it is not necessary to notify the offerer of the acceptance, the doing of the act being sufficient. But where A wrote B, "If Harry needs more money, let him have it or assist him to get it, and I will see you paid," the Court said:

"But if the act is of such a kind that knowledge of it will not quickly come to the promisor, the promisee is bound to give him notice of his acceptance within a reasonable time, after doing that which constitutes the acceptance."[64]

Acceptance by Post, Telegraph, or Telephone[edit | edit source]

Postal Rule[edit | edit source]

Main Article: Mailbox rule

As a rule of convenience, if the offer is accepted by post, the contract comes into existence at the moment that the acceptance was posted.[65] This rule only applies when, impliedly or explicitly, the parties have post in contemplation as a means of acceptance.[66] It excludes contracts involving land, letters incorrectly addressed and instantaneous modes of communication. The relevance of this early 19th century rule to modern conditions, when many quicker means of communication are available has been questioned, but the rule remains good law for the time being.

Acceptance by Agent[edit | edit source]

From the foregoing sections we draw these conclusions: That the acceptance of an offer must be communicated to the offerer; that it is communicated to him when it is delivered to his agent or messenger; that the post office and telegraph are his agents respectively when he expressly makes them so by requesting a reply by mail or telegraph or when he impliedly makes them so by using these agencies to make his offer or when the circumstances are such that it must have been within the contemplation of the parties that according to the usages of mankind the post might be used as a means of communicating the acceptance, but that the offerer may choose to make the acceptance conditional upon its actual receipt by offerer.

A few simple illustrations will suffice:

(1) A sends an offer to B by A's messenger, into whose hands B delivers the acceptance. (2) A makes B an offer by mail, requesting a reply by mail. B mails the acceptance. (3) A makes an offer to B by mail saying nothing as to how the acceptance is to be made. B mails an acceptance. (4) A makes an offer to B in the City of L by handing her a letter containing the offer, and giving her 14 days in which to accept. B lives in the City of B. Within the time dictated, B mails an acceptance to A.

In all of the above illustrations, the acceptance is "communicated" to A and the contract is complete, even if A never receives any of the acceptances.

(5) C sends an offer to D by her, C's messenger. D examines it and immediately sends his own clerk or servant with his acceptance to C. (6) C sends an offer to D by her servant and D immediately mails his acceptance. (7) C makes an offer by advertisement in a newspaper. D mails an acceptance. (8) C makes an offer to D by mail, and D dispatches his clerk to C with his acceptance. (9) C makes an offer to D by mail conditional on the acceptance being received by him by a certain day. D mails his acceptance to C.

In these cases, there is no communication of the acceptance to C until she actually receives it, and if it is lost on the way there is no contract.

Acceptance Makes Irrevocable Contract[edit | edit source]

An offer binds no one and may be revoked or lapse before acceptance. But acceptance by promise or act duly communicated before revocation or lapse supplies the element of agreement and binds both parties to the fulfillment of the terms of the contract. It changes the character of the offer, making it an irrevocable promise.[67]

Where an offer is accepted before it is revoked, the contract is as obligatory as if both promises were simultaneous. Here, as in other like cases, if both parties meet, one prepared to accept and the other to retract, whichever speaks first will have the law with them; and this question is one of fact to be decided by the jury.[68]

Revocation of Acceptance[edit | edit source]

Time and Place[edit | edit source]

Last shot rule[edit | edit source]

Often when two companies deal with each other in the course of business, they will use standard form contracts. Often these standard forms contain terms which conflict (e.g. both parties include a liability waiver in their form). The 'last shot rule' refers to the resulting legal dispute arising where both parties accept that a legally binding contract exists, but disagree about whose standard terms apply. Such disputes may be resolved by reference to the 'last document rule', i.e. whichever business sent the last document, or 'fired the last shot' (often the seller's delivery note) is held to have issued the final offer and the buyer's organization is held to have accepted the offer by signing the delivery note or simply accepting and using the delivered goods.

References[edit | edit source]

  1. R. Austen-Baker, "Gilmore and the Strange Case of the Failure of Contract to Die After All" (2000) 18 Journal of Contract Law 1.
  2. Powell v Lee (1908) 99 L.T. 284
  3. Robophone Facilities Ltd v. Blank [1966] 3 All E.R. 128.
  4. Household Fire and Carriage, (1879) 4 Exch Div 216
  5. [1862] 142 ER 1037.
  6. Re Selectmove Ltd [1994] BCC 349.
  7. Yates Building Co. Ltd v. R.J. Pulleyn & Sons (York) Ltd, (1975) 119 Sol. Jo. 370.
  8. Brogden v. Metropolitan Railway Company (1877) 2 App. Cas. 666
  9. Rust v. Abbey Life Assurance Co. Ltd
  10. Hyde v. Wrench (1840) 3 Beav 334.
  11. Stevenson v. McLean (1880) 5 QBD 346.
  12. O'Brien v. Boland, 166 Mass. 48l, 44 N. E. Rep. 602; McMillan v. Ames, 33 Minn. 257; Williams v. Forbes, 114 Ill. 167, 28 N. E. 463.
  13. See Implied Contracts
  14. Dick v. Fuller, 213 Fed. 98.
  15. Tram v. Gould, 5 Pick. 30.
  16. See Fishmongers Co. v . Robertson, 5 M. & G. 171.
  17. Kennaway v . Treleavan, 5 M. & W. 498.
  18. Morton v. Burn, 7 Ad. & Ell. 23.
  19. 62 Pa. St. 486.
  20. Niedermeyer v. Curators, 61 Mo. App. 654.
  21. See Communication of Offer
  22. Hobbs v. Massasoit Whip Co., 158 Mass. 194, 33 N. E. 495; Royal Ins. Co. v. Beatty, 119 Pa. St. 6, 12 Atl. 607, 4 Am. St. 622; Orcutt v. Roxbury, 17 Vt. 524; Day v. Eaton, 119 Mass. 513, 20 Am. R. 347.
  23. Slaymaker v. Irwin, 4 Whart. 369; Raysor v . Berkeley County R. Co., 26 S. C . 610, 2 S. E. 119; Titcomb v. U.S., 14 Ct. Cl. 263; Cincinnati Equipment Co. v. Big Muddy Co., 158 Ky. 247; 164 S. W. 794.
  24. Prescott v. Jones, 69 N. H. 305, 41 Atl. 352.
  25. 11 C. B. (N. S.) 698.
  26. Royal Ins. Co. v. Beatty, supra.
  27. 119 Pa. St. 6.
  28. Peterson v. Graham Shoe Co., 210 S. W. 737; Blue Grass Cordage Co. v. Luthy, 98 Ky. 583, 33 S. W. 835; Cole Co. v. Holloway, 141 Tenn. 679, 214 S. W. 817. But contra, Gould v. Cates Chair Co., 147 Ala. 629, 41 South 675; Metzler v. Harry Kaufman Co., 3 2 App. D. C. 434; Senner Co. v. Gera Mills, 173 N. Y. Supp, 265.
  29. Wheeler v. Kiaholt, 178 Mass. 197.
  30. Gaither v. Dougherty, 18 Ky. 709, 38 S. W. 2; Barber v. Brooks, 18 La. 463; Phelps v. Clasen, Woolw. 204; Robertson v. Ins. Co., 123 Mo. App. 238, 100 S. W. 686.
  31. Parker v . R. Co., 2 C. P. D. 416.
  32. Springer v. Cooper, 11 Ill. App. 267; Graves v. Smedes, 7 Dana (Ky.), 344; Woodlock v. Meyerstein, 5 Mo. App. 591; Hoyt v. Schillo Motor Co., 186 Ill. App. 628.
  33. Sellers v. Greer, 172 Ill. 549, 50 N. E. 246; Manufacturers Co. v. Eberncar Co., 152 Mo. 73, 138 N. W. 624.
  34. Sellers v. Greer, 172 Ill. 549, 50 N. E. 246; Manufacturers Co. v. Eberncar Co., 152 Mo. 7 3, 138 N. W. 624.
  35. "It is quite possible that a person who is neither a man of business nor a lawyer might on some particular occasion ship goods without the least knowledge or what a b111 of lading was, but such a person must bear the consequences of his own exceptional ignorance, it being plainly impossible that business could be carried on if every person who delivers a bill of lading had to stop to explain what a bill of lading was." Mellish, L. J., in Parker v . R. Co., 2 C. P. D. 425.
  36. Brittain Dry Goods Co. v. Bakersfield, 61 Pac. 253.
  37. Neuman v. Nat. Shoe Co., 54 N. Y. S. 942, 56 Id. 193.
  38. Schmaling v. Thomlinson, 1 Marsh. 560, 6 Taunt. 147; Boston Ice Co. v. Potter, 123 Mass. 28, 25 Am. Rep. 9; Quincy First Nat. Bank v. Hall, 101 U. S. 43; Equitable L. Assur. Soc. v. McElroy, 83 Fed. Rep. 631.
  39. Meynell v. Surtees, 3 Sm. & G. 101. Laborers employed by contractors and subconstractors to build a railroad stopped work and were creating a disturbance fearing they would not be paid. The president of the railroad came out and sa!d to them: "Go back to your work and I will see that you are paid." One of the subcontractors who was present and heard the offer brought action for his pay. It was held that the offer was not made to him, and that there was no agreement with him. Indianapolis R. Co. v. Miller, 71 Ill. 463.
  40. Boulton v. Jones, 2 H. & N. 564; British Wagon Co. v. Lee, 5 Q. B. D. 149; Boston Ice Co. v. Potter, 123 Mass. 28, 26 Am. Rep. 9.
  41. Walsh v. St. Louis Ex. Co., 90 Mo. 459.
  42. Bull v. Talcot, 2 Root 119, 1 Am. Dec. 62.
  43. Tarbell v. Stevens, 9 Iowa 168.
  44. Morrell v . Quarles, 35 Ala.; Ryer v. Stockwell, 14 Cal. 134, 73 Am. Dec. 634; Montgomery County v. Robinson, 85 Ill. 174; Loring v. Boston, 7 Metc. 409; Reif v. Paige, 55 Wis. 496, 13 N. W. Rep. 473, 42 Am. Rep. 731.
  45. A person may offer a reward orally as well as by handbill, poster, or newspaper advertisement. The latter modes are more likely to become generally known, but they are no more efficacious as offers than a public offer orally made. Hayden v. Singer, 56 Ind. 42.
  46. See cases In last notes. Bull v. Talcot, 2 Root 119, 1 Am. Dec. 62; Walsh v. St. Louis Ex. Co., 70 Mo. 459; Long v. Battle Creek, 39 Mich. 323, 33 Am. Rep. 384; Babcock v. Raymond, 2 Hilt. 61; Patton v. Hassinger, 69 Pa. St. 305.
  47. Roberts v. Cox, 91 Neb. 653, 136 N. W. 831; Pike Co. v. Spencer, 192 Fed. 11, 112 C. C. A. 433; Seymour v. Armstrong, 62 Kas. 720.
  48. Borland v. Gutfey, 1 Grant's Cas. 394; Egger v. Nesbitt, 122 Mo. 667, 27 S. W. Rep. 385, 43 A. M. St. Rep. 596; Kvale v. Keane, 39 N. D. 660, 168 N. W. Rep. 74; Hartford Life Ins. Co. v. Milet, 106 S. W. 144 (Ky.); Wheaton Building Co. v. Boston, 204 Mass. 218, 90 N. E. 598.
  49. Briggs v. Sizer, 30 N. Y. 647; Slaymaker v. Irwin, 4 Whart. 367; Nundy v. Matthews, 34 Hun. 74; McLean v. Gymnasium Assn., 64 Mo. (App.) 55.
  50. Eliason v. Henshaw, 4 Wheat. 226; Corcoran v. White, ll7 Ill. 118, 67 Am. Rep. 858; Northwest Iron Co. v. Meade, 21 Wis. 474, 94 Am. Dec. 657; U. S. v. Carlin Co., 224 Fed. 869, 138 C. C. A. 449.
  51. 9 Cyc. 267, 13 Cyc. 279, 13 C. J. 281.
  52. 4 M. & W. 155.
  53. Sawyer v. Brossart, 67 Ia. 678, 56 Am. Rep. 371; Moulton v. Kershaw, 59 Wis. 316, 48 Am. Rep. 616; Esmay v. Gorton, 18 Ill. 483.
  54. Iron Works v. Douglass, 49 Ark. 355; Treat v. Ullman, 69 N. Y. (S.) 974; Tilt v. La Salle Silk Co., 5 Daly, 19.
  55. 1 Cyc. 274. 13 C. J. 284; Felthouse v. Bindley, 11 C. B. (N. S.) 869; Brogden v. R. Co., L. R. 2 App. Cas. 691; Mactier v. Frith, 6 Wend. 103, 21 Am. Dec. 262; New v. Ins. Co., 171 Ind. 33, 85 N. E. 703; Kentucky Portland Co. v. Steckel, 164 Ky. 420, 175 S. W. 663.
  56. 46 N. Y. 467; Cleveland, etc., R. Co. v. Shea, 174 Ind. 303, 91 N. E. 1081.
  57. Davis Sewing Machine Co. v. Richards, 116 U. S. 514. But the first sentence in this rule is disapproved in Pennsylvania, where the Court says:

    Indeed it is difficult to imagine how precedent request alone can supply the place of subsequent notice, since after request made and proffer of guaranty, the merchant may refuse the credit or advance craved, and without notice the surety cannot know whether he has or has not. So far is this insisted on, that it is said without notice there can be no contract; for like all other contracts, that of guaranty requires both a proposal and acceptance thereof. The reasoning of the Supreme Court of this State is convincing, while for the doctrine of the United States Court no reason is offered, and we feel bound to follow the decisions of our own courts.

    Evans v. McCormick, 167 Pa. St. 247.
  58. Cleveland R. Co. v. R. Co., 174 Ind. 303, 91 N. E. 1081.
  59. Bowen, L. J. In Carlill v Carbolic Smoke Ball Co., 1 Q.B. 256 (1893), 2 Q.B. 484 (1892).
  60. Carlill v Carbolic Smoke Ball Co., supra. In this case defendants, proprietors of a medical preparation, issued an advertisement in which they offered to pay a certain sum to any person who should contract a certain disease after having used their preparation in a specified manner and for a specified period, and it was held that the plaintiff accepted the offer contained in the advertisement and rendered the defendants' promise binding by purchasing the preparation and using it as specified in the advertisement. Allen v. Chouteau, 102 Mo. 307, 14 S.W. Rep. 869; Niedermeyer v. Curators, 61 Mo. (App.), 654; Ahern v. Ins. Co., 2 Sweeny, 441.
  61. Cooper v. Altimus, 62 Pa. St. 486; Maugher v. Crosby, 117 Mass. 330; Briggs v. Sizer, 30 N. Y. 648; Harvey v. Johnson, 6 C . B. 295.
  62. Anson, Contr., 30, 31.
  63. 61 N.Y. 362; Brooks v. Ostrander, 158 Ill. App. 78.
  64. Bishop v. Eaton, 161 Mass. 498.
  65. Adams v Lindsell (1818) 106 ER 250
  66. Henthorn v Fraser [1892] 2 Ch 27.
  67. 9 Cyc. 283, 295, 13 C.J. 293; Revocation of Acceptance
  68. Martin v. Hudson, 81 Cal. 42, 22 Pac. Rep. 296; Quick v. Wheeler, 78 N.Y. 300.