Acceptance
## CHAPTER 3: HAS THE OFFER BEEN ACCEPTED?:
Once it has been determined that an offer was made, there is still often a question as to whether the offer was accepted. This is often closely related to the question of whether the offer was still valid at the time the purported acceptance took place. Chapter 4 examines in detail the question of when an offer terminates or ceases to be effective, but you need to understand a few basics of this issue in order to appreciate the material in this chapter. There are four basic ways an offer may terminate. For purposes of illustrating all four, we'll assume A has made the usual offer to B: "I'll sell you my car for \$1,000." Any of these terminates the original offer:
The offeree may reject the offer or make a counteroffer, which operates as a rejection (by operation of law). B says to A: "I'm not interested." Or B says to A: "I'll take it if you'll give it to me for \$900."
The offer may expire by its own terms, e.g., by lapse of time. If A says: "This offer is good until October 15," B can't accept it on October 16. If, as is often the case, the offer does not say when it expires, it expires after a reasonable time. We'll wait until we get to the next chapter to puzzle over what would be a reasonable time in these circumstances.
The offeror may revoke the offer. A can say: "I've changed my mind." As we'll see in the next chapter, A's right to do so is subject to some limitations.
The offeror or the offeree may die or be adjudicated incompetent. Either event terminates the offeror's capacity to contract and revokes the offer (by operation of law); he or she is no longer capable of making a legally-binding contract.
We can divide offers into three categories:
1.Offers that can be accepted only by performance, forming a unilateral contract;
2.Offers that can be accepted only by a promise, forming a bilateral contract; and
68 3.Offers that can be accepted either by performance or by a promise, forming a unilateral or bilateral contract, depending on the method of acceptance.
Since one of the main reasons we have contracts is to allow people to plan, to allow them to bind themselves and others to a course of action in the future, the second category---bilateral contracts---is the most common in practice. The first and third categories are fairly rare. It is an unusual situation where the offeror wants to bind herself and leave the offeree free to accept or not until it is time for the offeree to perform. One situation in which an offer can be accepted only by performance is a reward type situation where the offeror wants to entice people to try to perform a task that they might not be able to accomplish and thus would not want to promise to perform. (The real estate broker's "open listing," discussed below, is an example of the reward type situation as is a reward offered for the return of lost or stolen property.)
Another situation in which an offer might be capable of being accepted only by performance is where the offeree's promise would not be worth much. For example, in a famous case that we will look at in a future chapter, an uncle promised his nephew a large sum of money if the nephew did not smoke until he was 21. If the nephew made a promise not to smoke and then broke it, it is unlikely that the uncle would be able to sue the nephew and prevail, so it seems that the promise would be worthless and that a person in the nephew's position would be justified in believing that the offer could be accepted only by performance.
Offers that can be accepted only by performance are unusual outside of the situations described above. If a law professor wants to ask a question about an offer that can be accepted only by performance, he or she will normally make it clear that the situation fits into one of those described above, or they will make it clear from the language that the offer can be accepted only by performance. It's usually a rather contrived situation. (The UNIDROIT principles do not even bother to address the situation specifically.)
Distinguishing between the other two types of offers is often difficult. There are two competing considerations. In favor of finding that the offer can be accepted only by a promise is the fact that people who enter into contractual relationships generally want to get the other party bound as soon as possible in order to eliminate uncertainty. This means getting a promise well ahead of the time that performance is to begin. On the other hand, R2d § 32 says that in case of doubt, an offer is interpreted as inviting acceptance either by a promise or by performance.
Fortunately, most of the time, you will not have to decide into which of these two categories the offer falls. If the offeree accepts by making a promise (which is what usually happens), it doesn't matter. It's only when 69 the offeree tries to accept by rendering a performance that you have to ask: "Should it have been clear to the offeree that the offeror was seeking a promise and was not seeking performance?" PRACTICE TIP: TYPES OF REAL ESTATE BROKERAGE CONTRACTS
Open Listing: This is an offer for a unilateral contract in which the seller promises to pay a commission if (1) the broker produces a buyer ready, willing, and able to purchase under the terms set forth in the agreement (e.g., \$100,000 with 20% down and the balance over 10 years at 8% interest) or (2) the broker produces a buyer and the seller sells to that buyer, whether or not at the terms set forth in the brokerage agreement. The purpose of an open listing is to allow the seller to deal with a number of brokers at the same time.
Exclusive Listing: This is a bilateral contract in which the broker promises to use her best efforts to procure a buyer and the seller promises to pay a commission if (1) the broker produces a buyer ready, willing, and able to purchase under the terms set forth in the agreement or (2) the broker produces a buyer and the seller sells to that buyer, whether or not at the terms set forth in the brokerage agreement. The owner agrees not to engage other brokers, but the owner has the right to sell the property herself during the term of the agreement without paying the broker a commission.
Exclusive Right to Sell: This is a bilateral contract in which the broker promises to use her best efforts to produce a buyer and the seller promises to pay a commission if (1) the broker produces a buyer ready, willing, and able to purchase under the terms set forth in the agreement, or (2) the property is sold during the term of the agreement (even if the owner finds the buyer herself), or (3) the seller takes the property off the market during the term of the agreement. In the cases that follow, the offeree said or did something before the offer was terminated that might or might not have been an acceptance. The court is being called upon to determine whether the offeree's words or actions constitute an acceptance.
As you read the cases, consider R2d § 50(1) and UNIDROIT article 2.1.6(1). The rules seem simple but have some implications you might not expect.
70 Ever-Tite Roofing Corp. v. Green
Court of Appeal of Louisiana 83 So.2d 449 (1955)
Ayres, Judge.
[1]This is an action for damages allegedly sustained by plaintiff as the result of the breach by the defendants of a written contract for the re-roofing of defendants' residence. Defendants denied that their written proposal or offer was ever accepted by plaintiff in the manner stipulated therein for its acceptance, and hence contended no contract was ever entered into. The trial court sustained defendants' defense and rejected plaintiff's demands and dismissed its suit at its costs. From the judgment thus rendered and signed, plaintiff appealed.
[2]Defendants executed and signed an instrument June 10, 1953, for the purpose of obtaining the services of plaintiff in re-roofing their residence situated in Webster Parish, Louisiana. The document set out in detail the work to be done and the price therefore to be paid in monthly installments. This instrument was likewise signed by plaintiff's sales representative, who, however, was without authority to accept the contract for and on behalf of the plaintiff. This alleged contract contained these provisions:
This agreement shall become binding only upon written acceptance thereof, by the principal or authorized officer of the Contractor, or upon commencing performance of the work. This contract is Not Subject to Cancellation. It is understood and agreed that this contract is payable at office of Ever-Tite Roofing Corporation, 5203 Telephone, Houston, Texas. It is understood and agreed that this Contract provides for attorney's fees and in no case less than ten percent attorney's fees in the event same is placed in the hands of an attorney for collecting or collected through any court, and further provides for accelerated maturity for failure to pay any installment of principal or interest thereon when due.
This written agreement is the only and entire contract covering the subject matter hereof and no other representations have been made unto Owner except these herein contained. No guarantee on repair work, partial roof jobs, or paint jobs.
(Emphasis supplied.)
[3]In as much as this work was to be performed entirely on credit, it was necessary for plaintiff to obtain credit reports and approval from the lending institution which was to finance said contract. With this procedure defendants were more or less familiar and knew their credit rating would have to be checked and a report made. On receipt of the proposed contract 71 in plaintiff's office on the day following its execution, plaintiff requested a credit report, which was made after investigation and which was received in due course and submitted by plaintiff to the lending agency. Additional information was requested by this institution, which was likewise in due course transmitted to the institution, which then gave its approval.
[4]The day immediately following this approval, which was either June 18 or 19, 1953, plaintiff engaged its workmen and two trucks, loaded the trucks with the necessary roofing materials and proceeded from Shreveport to defendants' residence for the purpose of doing the work and performing the services allegedly contracted for the defendants. Upon their arrival at defendants' residence, the workmen found others in the performance of the work which plaintiff had contracted to do. Defendants notified plaintiff's workmen that the work had been contracted to other parties two days before and forbade them to do the work.
[5]Formal acceptance of the contract was not made under the signature and approval of an agent of plaintiff. It was, however, the intention of plaintiff to accept the contract by commencing the work, which was one of the ways provided for in the instrument for its acceptance, as will be shown by reference to the extract from the contract quoted herein above. Prior to this time, however, defendants had determined on a course of abrogating the agreement and engaged other workmen without notice thereof to plaintiff.
[6]The basis of the judgment appealed was that defendants had timely notified plaintiff before "commencing performance of work." The trial court held that notice to plaintiff's workmen upon their arrival with the materials that defendants did not desire them to commence the actual work was sufficient and timely to signify their intention to withdraw from the contract. With this conclusion we find ourselves unable to agree.
[7]Defendants' attempt to justify their delay in thus notifying plaintiff for the reason they did not know where or how to contact plaintiff is without merit. The contract itself, a copy of which was left with them, conspicuously displayed plaintiff's name, address and telephone number. Be that as it may, defendants at no time, from June 10, 1953, until plaintiff's workmen arrived for the purpose of commencing the work, notified or attempted to notify plaintiff of their intention to abrogate, terminate or cancel the contract.
[8]Defendants evidently knew this work was to be processed through plaintiff's Shreveport office. The record discloses no unreasonable delay on plaintiff's part in receiving, processing or accepting the contract or in commencing the work contracted to be done. No time limit was specified in the contract within which it was to be accepted or within which the work was to be begun. It was nevertheless understood between the parties that some delay would ensue before the acceptance of the contract and the [10]Therefore, since the contract did not specify the time within which it was to be accepted or within which the work was to have been commenced, a reasonable time must be allowed therefor in accordance with the facts and circumstances and the evident intention of the parties. A reasonable time is contemplated where no time is expressed. What is a reasonable time depends more or less upon the circumstances surrounding each particular case. The delays to process defendants' application were not unusual. The contract was accepted by plaintiff by the commencement of the performance of the work contracted to be done. This commencement began with the loading of the trucks with the necessary materials in Shreveport and transporting such materials and the workmen to defendants' residence. Actual commencement or performance of the work therefore began before any notice of dissent by defendants was given plaintiff. The proposition and its acceptance thus became a completed contract.
[11]By their aforesaid acts defendants breached the contract. They employed others to do the work contracted to be done by plaintiff and forbade plaintiff's workmen to engage upon that undertaking.
* * *
[12]For the reasons assigned, the judgment appealed is annulled, avoided, reversed and set aside and there is now judgment in favor of plaintiff, Ever-Tite Roofing Corporation, against the defendants, G. T. Green and Mrs. Jessie Fay Green, for the full sum of \$311.371, with 5 per 73 cent per annum interest thereon from judicial demand until paid, and for all costs.
Reversed and rendered.
Notes and Questions
1.Read R2d § 30(1). This section reiterates in more formal language the generally-accepted rule that "the offeror is master of her offer." It is mirrored in R2d § 50(1). Suppose A says to B: "I hereby offer to sell you my car for \$1,000. You can accept this offer only by standing on your head and whistling The Star-Spangled Banner." B can't accept the offer by saying "It's a deal." B can't accept the offer by paying A \$1,000. B can accept the offer only by standing on his head and whistling The Star-Spangled Banner.
2.Read R2d § 30(2). What was the offer in Ever-Tite? How was it accepted? How else could it have been accepted?
3.The court ignores a powerful argument for the defendants. What is it? (Hint: Remember that we've been talking about the importance of characterizing the facts in a way most favorable to our client. You should also start looking at alternative ways of interpreting language. Could "commencing performance of work" have a meaning other than the one the court gave it? Many attorneys start billing for their time when travel to an engagement starts.)
4.In Ever-Tite, whom did the court regard as specifying how the offer could be accepted? Who really determined how the offer could be accepted? Was the court therefore wrong in the way it decided the case?
5.UNIDROIT article 2.1.6 corresponds to R2d § 50(1). Are the standards the same?
Problem 3-1
A writes B a letter:
Dear B:
I hereby offer to sell you my collection of Marilyn Monroe memorabilia for \$1,000.
Please advise me by mail whether you accept this offer.
Sincerely,
74 B gets the letter and telephones A telling him she accepts the offer. Has a contract been formed? See R2d § 60.
What if B gets the letter and e-mails A telling him she accepts the offer? Beard Implement Co. v. Krusa
Appellate Court of Illinois 208 Ill. App. 3d 953, 153 Ill. Dec. 387, 567 N.E.2d 345 (1991)
Steigmann, J.
[1]This action involves an alleged breach of contract between plaintiff seller, Beard Implement Company, Inc., a farm implement dealership, and defendant buyer, Carl Krusa, a farmer, for the purchase of a 1985 Deutz-Allis N-5 combine. The dispositive issue on appeal is whether the trial court in a bench trial erred in finding a contract existed between the parties. Specifically, defendant contends that plaintiff never accepted defendant's offer to purchase the combine. We agree and reverse.
[2]At trial, defendant testified that between December 20 and December 23, 1985, he had several conversations with plaintiff's representatives concerning the purchase of a new combine. Defendant owned a 1980 Deutz-Allis N-5 combine at that time. In fall 1985, both spindles on his combine had broken and defendant spoke with plaintiff's representatives about repairing them.
[3]On December 23, 1985, defendant met with plaintiff's representatives at plaintiff's office in Arenzville, Illinois. Defendant testified that one of plaintiff's representatives, either Jim Beard or Gerry Beard, filled out a purchase order for a new combine for the price of \$52,8002 cash and the trade-in of the combine defendant then owned. . . . Defendant signed the Allis-Chalmers purchase order, which was dated December 23, 1985. None of plaintiff's representatives signed that order on December 23, 1985, or at any time thereafter. The bottom left corner of this order reads as follows:
DEALER'S SALESMAN
This order subject to acceptance by dealer.
Accepted by:
DEALER
75 [4]At the same time defendant signed the purchase order, he also signed a counter check drawn on a local bank in the amount of \$5,200. Defendant testified that because he did not have his checkbook, plaintiff provided him with the counter check.3 The check was undated and intended to represent a down payment on the combine. Defendant testified that the check was not dated because he was to call plaintiff later and let plaintiff know if he wanted to proceed with the transaction. At that time, plaintiff would put a date on the check.
[5]Defendant testified that he had misgivings over the Christmas weekend and, after discussing the situation with his wife, telephoned plaintiff's manager, Duane Hess, on December 26, 1985, and told Hess that he did not wish to proceed with the transaction. Defendant explained to Hess that defendant and his wife had determined that "the price was too high" and they "did not want to go further into debt to finance the transaction." Defendant testified that Hess told him that if defendant thought the combine was too expensive, Hess would let defendant out of the deal. Hess did not indicate whether he had signed the order.
[6]Earlier on December 26, 1985, defendant had met with a representative of Cox Implement Company. Defendant identified a copy of the order form that one of Cox's salesman had filled out. This order was dated December 26, 1985, but was signed on December 27. Defendant testified that he told Cox's salesman that his price was too high and that defendant could not go through with either that bid or plaintiff's bid. However, after Cox's quoted price was reduced and the figures on the purchase order were scratched out, defendant signed the purchase order with Cox on December 27, 1985. Defendant stated the agreement with Cox was for the same model combine he was negotiating for with plaintiff but at a lower price. He wanted to consummate the transaction by December 31, 1985, in order to take advantage of the investment tax credit.
[7]Defendant wrote a letter to plaintiff that was dated December 26, 1985, but sent on December 27, 1985. That letter read as follows:
Dec. 26, '85
Dear Sirs:
As I told you by phone on Dec. 26, '85, I do not wish to purchase the 1985--5 combine we talked about so please send me the uncashed counter check on the Bank of Bluffs for the amount of \$5,200. Since my "Purchase Order Sheet" had not yet been signed 76 by the dealer rep, the check wasn't cashed before notification, & the combine wasn't picked up, the [inconvenience] should have been slight.
Feel free to consult my attorney, John D. Coonrod, for details. Again, excuse these changes of events.
Sincerely,
Carl W. Krusa (FOR "K" FARMS)
[8]Defendant testified that Jim Beard visited defendant at his farm around lunchtime on December 27, 1985. During this visit, Jim told defendant, "There's no problem, Carl, just please send a check to Tony Thomas for his time explaining the differences between models and options." Defendant recalled that their conversation was friendly and that Jim told him something to the effect that, "Carl, we maybe lost a little bit of commission on this, but don't worry about it. I'll make it up on the next sale." Defendant signed the contract with Cox later that afternoon.
[9]Defendant testified that when he spoke with Hess on the evening of December 26, Hess did not indicate that he had signed the order that had been signed earlier by defendant. Defendant testified that in his letter to plaintiff, he enclosed a check for \$100 made payable to Thomas for Thomas' time. Defendant believed that once this sum was paid, he was released from any obligation to plaintiff seller. [10]Jim Beard testified that in fall 1985, he approached defendant several times about purchasing a new combine. Jim testified that he again spoke with defendant about purchasing a new combine at plaintiff's Arenzville office at 3:30 or 4 p.m. on December 23, 1985. Gerry Beard was also present. Jim stated that he did not have the authority to sell the combine at a given price; only Gerry and Hess had that authority. The price quoted by Gerry to defendant was \$52,800 and the trade-in of defendant's existing combine. Jim identified the purchase order bearing defendant's signature. Jim filled in all the other information on that order.
[11]Jim testified that defendant did not make any statements that he was going to consider the purchase further after signing the purchase order. Jim also stated that defendant did not make any statements to the effect that the purchase order was not to be considered a completed contract.
[12]Jim identified the counter check payable to plaintiff for \$5,200. He stated that he filled out the check and defendant signed it, but that he forgot to fill in the date on the check. Jim did not recall any statement made by defendant that the check should be held. Jim recalled that the purchase order and check were signed at approximately 5:30 p.m. He stated that defendant was not threatened or told that he could not leave the office until 77 he signed the order. Jim stated that he would not have signed the order if defendant had said anything about reserving the right to call back later and cancel the deal.
[13]Jim next spoke with defendant on December 27, 1985. Hess told Jim that defendant did not want to buy the combine and asked Jim to visit defendant. Jim met with defendant that same day and asked defendant why he could not buy the combine. Defendant told him that he could not afford it. Jim stated that defendant did not mention that he had purchased a combine from someone else.
[14]On cross-examination, Jim admitted that he did not sign the purchase order which defendant had signed. He testified that Gerry and Hess are authorized to accept offers on behalf of plaintiff, but that neither one signed the order.
[15]Gerry Beard testified that defendant came to plaintiff's office in the afternoon of December 23. Gerry stated that he attempted to persuade defendant to purchase a new combine. Gerry testified that he offered to sell the new combine to defendant for \$52,800 and that defendant replied, "I'll take the deal." Defendant then signed the order and counter check and left plaintiff's offices.
[16]Gerry stated that he is authorized to accept contracts on behalf of plaintiff. He testified that he accepted the contract with defendant. Gerry stated that defendant did not indicate, after signing the counter check and purchase order, that the transaction was not a completed deal.
[17]On appeal, defendant argues that the trial court erred in finding that a contract existed between him and plaintiff for the purchase of a combine. Defendant argues plaintiff never accepted defendant's offer to purchase the combine because the purchase order defendant signed required a signature by a "dealer" on behalf of plaintiff for acceptance and none of plaintiffs representatives ever signed that order. Accordingly, defendant's subsequent refusal to "go through with the deal" constituted a valid revocation of his offer.
[18]Plaintiff argues that a contract existed between the parties even before their agreement was reduced to writing. Essentially, plaintiff contends that after the verbal agreement was reached, the terms of that agreement were memorialized on the purchase order, which was then signed by defendant. Further, plaintiff argues that this verbal agreement was evidenced by a counter check, which was also signed by defendant and which represented a down payment on the combine. Plaintiff asserts that it accepted both the purchase order and the down payment by placing those documents in its office.
[19]In deciding whether the offer in the present case has been accepted, this court must first identify both the offeror and the offeree. A 78 treatise on contract law provides some guidance on this issue: "A [ ]4 problem arises when A, through a salesman, has frequently solicited orders from B, the contract to arise when approved by A at A's home office. As we have seen in this situation[,] B is the offeror and A the offeree." J. Calamari & J. Perillo, Contracts § 2--18, at 85 (3d ed. 1987).
[20]In Foremost Pro Color, Inc. v. Eastman Kodak Co. (9th Cir.1983), 703 F.2d 534, the court considered whether a contract existed based on two unsigned purchase orders. The district court had concluded that no contract existed because the purchase orders were merely offers to buy, inviting acceptance either by a prompt promise to ship or by prompt or current shipment. (Foremost, 703 F.2d at 538.) The court of appeals agreed and stated that the weight of authority suggests that purchase orders are not enforceable contracts until accepted by the offeree. Foremost, 703 F.2d at 539.
[21]In the instant case, the purchase order form signed by defendant constitutes an offer made by defendant to plaintiff. Thus, this court needs to determine whether defendant's offer was accepted by plaintiff.
[22]Section 2--206 of the Uniform Commercial Code---Sales (Code) states the following:
(1)Unless otherwise unambiguously indicated by the language or circumstances
(a)an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
(b)an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
(2)Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance. (Ill. Rev. Stat.1989, ch. 26, par. 2--206.)
[23]For the purposes of the present case, the key word in this statute is the term "unambiguously." If defendant's offer contained on the purchase order is unambiguous in inviting acceptance only by the signature of plaintiff's "dealer," no contract exists until the purchase order is signed accordingly. If, however, defendant's offer is ambiguous in inviting [24]On appeal, defendant has cited several cases supporting the argument that the purchase order he signed unambiguously invites acceptance only by signature of plaintiff's "dealer." One such case is Brophy v. City of Joliet (1957), 14 Ill. App. 2d 443, 144 N.E.2d 816, which involved the sale of revenue bonds. In that case, the court stated that where an offer requires an acceptance to be made in writing, no other form of acceptance can be made. The offer in Brophy read as follows:
The signed acceptance of this proposal shall constitute a contract between the undersigned and the city . . .
[ ]Accepted for and on behalf of . . . , which is hereby acknowledged by the duly, qualified officials.
[ ]_____________________ Mayor
[ ]_____________________ City Clerk
Brophy, 14 Ill.App.2d at 448, 144 N.E.2d at 819.
[25]In La Salle National Bank v. Vega, 167 Ill. App.3d 154, 520 N.E.2d 1129 (1988), the court dealt with a real estate sales document which was signed by the seller as offeror and clearly stated that a contract would be in full force upon execution by the purchasing trust. The court held that the document did not constitute a valid contract in the absence of acceptance by the written execution of the purchasing trust. The court noted that an offeror has complete control over his offer and its terms of acceptance, and no other mode may be used where a written acceptance is required. La Salle National Bank, 167 Ill. App. 3d at 161--62, 520 N.E.2d at 1133.
[The court discussed three more cases with similar facts.---Eds.]
[26]Plaintiff counters defendant's argument by contending that plaintiff was the one to offer the combine to defendant and defendant accepted plaintiff's offer by signing a counter check and giving that check to plaintiff as a down payment on the combine. We are unpersuaded.
[27]We construe section 2--206 of the Code as giving approval to an ancient and cardinal rule of the law of contracts: the offeror is the master of his offer. An offeror may prescribe as many conditions or terms of the method of acceptance as he may wish, including, but not limited to, the time, place, and manner. We also note that contracts are generally construed against the party who drafted the document and that plaintiff drafted the purchase order in the present case, and then gave it to defendant to use for his offer to purchase the combine.
[28]Based on the foregoing, we conclude that the purchase order in this case "unambiguously" required the signature by plaintiff's "dealer" in 80 order to be a proper acceptance of defendant's offer. Because plaintiff's "dealer" never signed the purchase order, no contract ever existed.
[29]For the reasons stated, the judgment in favor of plaintiff is reversed.
Lund, J., and Green, J., concur.
Notes and Questions
1.The dealer argued that an oral contract had been formed before the purchase order was signed. If that had been the case, would it matter whether the "dealer" ever signed the purchase order?
2.In a case involving facts very similar to the facts of this case, the Los Angeles Rams lost the services of a Heisman Trophy winner because the National Football League's standard player contract form provided that there was no contract until the deal was approved by the league's commissioner. The player, Billy Cannon, signed the Rams' document, but before the commissioner approved, Cannon informed the Rams he was taking a better deal from the Houston Oilers of the newly-formed American Football League (AFL). The court held that Cannon didn't have a contract with the Rams. His signing the form was the offer and it was not accepted until the commissioner gave his approval. Los Angeles Rams Football Club v. Cannon, 185 F.Supp. 717 (S.D.Cal.1960). Because the AFL was able to sign stars like Cannon, it was able to become a competitor to the National Football League (NFL). The two leagues later merged to create the present NFL.
3.Suppose that in the Billy Cannon case, Mr. Cannon had said before he signed the form: "I don't want to hang around waiting for some bureaucrat to approve this. I want to know right now whether we have a contract. So let's just cross out the part that says it has to be approved by the commissioner."
(a)If they had then just signed the form, would they have a contract?
(b)Suppose the League had a rule that no player contract is valid without the signature of the commissioner. Would that affect the outcome? Davis v. Jacoby
Supreme Court of California 1 Cal. 2d 370, 34 P.2d 1026 (1934)
Per Curiam.
[1]Plaintiffs appeal from a judgment refusing to grant specific performance of an alleged contract to make a will. The facts are not in dispute and are as follows:
[2]The plaintiff Caro M. Davis was the niece of Blanche Whitehead, who was married to Rupert Whitehead. Prior to her marriage in 1913 to her co-plaintiff Frank M. Davis, Caro lived for a considerable time at the home of the Whiteheads, in Piedmont, Cal. The Whiteheads were childless and extremely fond of Caro. The record is replete with uncontradicted testimony of the close and loving relationship that existed between Caro and her aunt and uncle. During the period that Caro lived with the Whiteheads, she was treated as and often referred to by the Whiteheads as their daughter. In 1913, when Caro was married to Frank Davis, the marriage was arranged at the Whitehead home and a reception held there. After the marriage Mr. and Mrs. Davis went to Mr. Davis' home in Canada, where they have resided ever since. During the period 1913 to 1931 Caro made many visits to the Whiteheads, several of them being of long duration. The Whiteheads visited Mr. and Mrs. Davis in Canada on several occasions. After the marriage and continuing down to 1931 the closest and most friendly relationship at all times existed between these two families. They corresponded frequently, the record being replete with letters showing the loving relationship.
[3]By the year 1930, Mrs. Whitehead had become seriously ill. She had suffered several strokes and her mind was failing. Early in 1931 Mr. Whitehead had her removed to a private hospital. The doctors in attendance had informed him that she might die at any time or she might linger for many months. Mr. Whitehead had suffered severe financial reverses. He had several sieges of sickness and was in poor health. The record shows that during the early part of 1931 he was desperately in need of assistance with his wife, and in his business affairs, and that he did not trust his friends in Piedmont. On March 18, 1931, he wrote to Mrs. Davis telling her of Mrs. Whitehead's condition and added that Mrs. Whitehead was very wistful. "Today I endeavored to find out what she wanted. I finally asked her if she wanted to see you. She burst out crying and we had great difficulty in getting her to stop. Evidently, that is what is on her mind. It is a very difficult matter to decide. If you come it will mean that you will have to leave again, and then things may be serious. I am going to see the doctor, and get his candid opinion and will then write you again . . . Since writing the above, I have seen the doctor, and he thinks it will help considerably if you come." Shortly thereafter, Mr. Whitehead wrote to Caro 82 Davis further explaining the physical condition of Mrs. Whitehead and himself. On March 24, 1931, Mr. Davis, at the request of his wife, telegraphed to Mr. Whitehead as follows: "Your letter received. Sorry to hear Blanche not so well. Hope you are feeling better yourself. If you wish Caro to go to you can arrange for her to leave in about two weeks. Please wire me if you think it advisable for her to go." On March 30, 1931, Mr. Whitehead wrote a long letter to Mr. Davis, in which he explained in detail the condition of Mrs. Whitehead's health and also referred to his own health. He pointed out that he had lost a considerable portion of his cash assets but still owned considerable realty, that he needed some one to help him with his wife and some friend he could trust to help him with his business affairs and suggested that perhaps Mr. Davis might come to California. He then pointed out that all his property was community property; that under his will all the property was to go to Mrs. Whitehead; that he believed that under Mrs. Whitehead's will practically everything was to go to Caro. Mr. Whitehead again wrote to Mr. Davis under date of April 9, 1931, pointing out how badly he needed some one he could trust to assist him, and giving it as his belief that if properly handled he could still save about \$150,000. He then stated: "Having you [Mr. Davis] here to depend on and to help me regain my mind and courage would be a big thing." Three days later, on April 12, 1931, Mr. Whitehead again wrote, addressing his letter to "Dear Frank and Caro," and in this letter made the definite offer, which offer it is claimed was accepted and is the basis of this action. In this letter he first pointed out that Blanche, his wife, was in a private hospital and that "she cannot last much longer . . . my affairs are not as bad as I supposed at first. Cutting everything down I figure \$150,0005 can be saved from the wreck." He then enumerated the values placed upon his various properties and then continued:
My trouble was caused by my friends taking advantage of my illness and my position to skin me.
Now if Frank could come out here and be with me, and look after my affairs, we could easily save the balance I mention, provided I don't get into another panic and do some more foolish things.
The next attack will be my end, I am 65 and my health had been bad for years, so, the Drs. don't give me much longer to live. So if you can come, Caro will inherit everything and you will make our lives happier and see Blanche is provided for to the end. My eyesight had gone back on me, I can't read only for a few lines at a time. I am at the house alone with Stanley [the chauffeur] who does everything for me and is a fine fellow. Now, what I want is 83 some one who will take charge of my affairs and see I don't lose any more. Frank can do it, if he will and cut out the booze.
Will you let me hear from you as soon as possible, I know it will be a sacrifice but times are still bad and likely to be, so by settling down you can help me and Blanche and gain in the end. If I had you here my mind would get better and my courage return, and we could work things out.
[4]This letter was received by Mr. Davis at his office in Windsor, Canada, about 9:30 a.m. April 14, 1931. After reading the letter to Mrs. Davis over the telephone, and after getting her belief that they must go to California, Mr. Davis immediately wrote Mr. Whitehead a letter, which, after reading it to his wife, he sent by air mail. This letter was lost, but there is no doubt that it was sent by Davis and received by Whitehead; in fact, the trial court expressly so found. Mr. Davis testified in substance as to the contents of this letter. After acknowledging receipt of the letter of April 12, 1931, Mr. Davis unequivocally stated that he and Mrs. Davis accepted the proposition of Mr. Whitehead and both would leave Windsor to go to him on April 25. This letter of acceptance also contained the information that the reason they could not leave prior to April 25 was that Mr. Davis had to appear in court on April 22 as one of the executors of his mother's estate. The testimony is uncontradicted and ample to support the trial court's finding that this letter was sent by Davis and received by Whitehead. In fact, under date of April 15, 1931, Mr. Whitehead again wrote to Mr. Davis and stated:
Your letter by airmail received this a.m. Now, I am wondering if I have put you to unnecessary trouble and expense, if you are making any money don't leave it, as things are bad here . . . You know your business and I don't and I am half crazy in the bargain, but I don't want to hurt you or Caro.
Then on the other hand if I could get some one to trust and keep me straight I can save a good deal, about what I told you in my former letter.
[5]This letter was received by Mr. Davis on April 17, 1931, and the same day Mr. Davis telegraphed to Mr. Whitehead: "Cheer up---we will soon be there, we will wire you from the train."
[6]Between April 14, 1931, the date the letter of acceptance was sent by Mr. Davis, and April 22, Mr. Davis was engaged in closing out his business affairs, and Mrs. Davis in closing up their home and in making other arrangements to leave. On April 22, 1931, Mr. Whitehead committed suicide. Mr. and Mrs. Davis were immediately notified and they at once came to California. From almost the moment of her arrival Mrs. Davis devoted herself to the care and comfort of her aunt, and gave her aunt constant attention and care until Mrs. Whitehead's death on May 30, 1931. On this point the trial court found: "From the time of their arrival in Piedmont, Caro M. Davis administered in every way to the comforts of Blanche Whitehead and saw that she was cared for and provided for down to the time of the death of Blanche Whitehead on May 30, 1931; during said time Caro M. Davis nursed Blanche Whitehead, cared for her and administered to her wants as a natural daughter would have done toward and for her mother."
[7]This finding is supported by uncontradicted evidence and in fact is conceded by respondents to be correct. In fact, the record shows that after their arrival in California Mr. and Mrs. Davis fully performed their side of the agreement.
[8]After the death of Mrs. Whitehead, for the first time it was discovered that the information contained in Mr. Whitehead's letter of March 30, 1931, in reference to the contents of his and Mrs. Whitehead's wills was incorrect. By a duly witnessed will dated February 28, 1931, Mr. Whitehead, after making several specific bequests, had bequeathed all of the balance of his estate to his wife for life, and upon her death to respondents Geoff Doubble and Rupert Ross Whitehead, his nephews. Neither appellant was mentioned in his will. It was also discovered that Mrs. Whitehead by a will dated December 17, 1927, had devised all of her estate to her husband. The evidence is clear and uncontradicted that the relationship existing between Whitehead and his two nephews, respondents herein, was not nearly as close and confidential as that existing between Whitehead and appellants.
[9]After the discovery of the manner in which the property had been devised was made, this action was commenced upon the theory that Rupert Whitehead had assumed a contractual obligation to make a will whereby "Caro Davis would inherit everything"; that he had failed to do so; that plaintiffs had fully performed their part of the contract; that damages being insufficient, quasi specific performance should be granted in order to remedy the alleged wrong, upon the equitable principle that equity regards that done which ought to have been done. The requested relief is that the beneficiaries under the will of Rupert Whitehead, respondents herein, be declared to be involuntary trustees for plaintiffs of Whitehead's estate.
[10]It should also be added that the evidence shows that as a result of Frank Davis leaving his business in Canada he forfeited not only all insurance business he might have written if he had remained, but also forfeited all renewal commissions earned on past business. According to his testimony this loss was over \$8,000.6
[11]The trial court found that the relationship between Mr. and Mrs. Davis and the Whiteheads was substantially as above recounted and that 85 the other facts above stated were true; that prior to April 12, 1931, Rupert Whitehead had suffered business reverses and was depressed in mind and ill in body; that his wife was very ill; that because of his mental condition he "was unable to properly care for or look after his property or affairs"; that on April 12, 1931, Rupert Whitehead in writing made an offer to plaintiffs that, if within a reasonable time thereafter plaintiffs would leave and abandon their said home in Windsor, and if Frank M. Davis would abandon or dispose of his said business, and if both of the plaintiffs would come to Piedmont in the said county of Alameda where Rupert Whitehead then resided and thereafter reside at said place and be with or near him, and if Frank M. Davis would thereupon and thereafter look after the business and affairs of said Rupert Whitehead until his condition improved to such an extent as to permit him so to do, and if the plaintiffs would look after and administer to the comforts of Blanche Whitehead and see that she was properly cared for until the time of her death, that, in consideration thereof, Caro M. Davis would inherit everything that Rupert Whitehead possessed at the time of his death and that by last will and testament Rupert Whitehead would devise and bequeath to Caro M. Davis all property and estate owned by him at the time of his death, other than the property constituting the community interest of Blanche Whitehead; that shortly prior to April 12, 1931, Rupert Whitehead informed plaintiffs of the supposed terms of his will and the will of Mrs. Whitehead. The court then finds that the offer of April 12 was not accepted. As already stated, the court found that plaintiffs sent a letter to Rupert Whitehead on April 14 purporting to accept the offer of April 12, and also found that this letter was received by the Whiteheads, but finds that in fact such letter was not a legal acceptance. The court also found that the offer of April 12 was "fair and just and reasonable, and the consideration therefor, namely, the performance by plaintiffs of the terms and conditions thereof, if the same had been performed, would have been an adequate consideration for said offer and for the agreement that would have resulted from such performance; said offer was not, and said agreement would not have been, either harsh or oppressive or unjust to the heirs at law, or devisees, or legatees, of Rupert Whitehead, or to each or any of them, or otherwise."
[12]The court also found that plaintiffs did not know that the statements made by Whitehead in reference to the wills were not correct until after Mrs. Whitehead's death, that after plaintiffs arrived in Piedmont they cared for Mrs. Whitehead until her death and "Blanche Whitehead was greatly comforted by the presence, companionship and association of Caro M. Davis, and by her administering to her wants."
[13]The theory of the trial court and of respondents on this appeal is that the letter of April 12 was an offer to contract, but that such offer could only be accepted by performance and could not be accepted by a promise to perform, and that said offer was revoked by the death of Mr. Whitehead 86 before performance. In other words, it is contended that the offer was an offer to enter into a unilateral contract, and that the purported acceptance of April 14 was of no legal effect.
[14]The distinction between unilateral and bilateral contracts is well settled in the law. It is well stated in section 12 of the American Institute's Restatement of the Law of Contracts as follows: "A unilateral contract is one in which no promisor receives a promise as consideration for his promise. A bilateral contract is one in which there are mutual promises between two parties to the contract; each party being both a promisor and a promisee." This definition is in accord with the law of California.
[15]In the case of unilateral contracts no notice of acceptance by performance is required. Section 1584 of the Civil Code provides: "Performance of the conditions of a proposal . . . is an acceptance of the proposal."
[16]Although the legal distinction between unilateral and bilateral contracts is thus well settled, the difficulty in any particular case is to determine whether the particular offer is one to enter into a bilateral or unilateral contract. Some cases are quite clear cut. Thus an offer to sell which is accepted is clearly a bilateral contract, while an offer of a reward is a clear-cut offer of a unilateral contract which cannot be accepted by a promise to perform, but only by performance. Between these two extremes is a vague field where the particular contract may be unilateral or bilateral depending upon the intent of the offer and the facts and circumstances of each case. The offer to contract involved in this case falls within this category. By the provisions of the Restatement of the Law of Contracts it is expressly provided that there is a presumption that the offer is to enter into a bilateral contract. Section 31 provides: "In case of doubt it is presumed that an offer invites the formation of a bilateral contract by an acceptance amounting in effect to a promise by the offeree to perform what the offer requests, rather than the formation of one or more unilateral contracts by actual performance on the part of the offeree."
[17]Professor Williston, in his Treatise on Contracts, volume 1, § 60, also takes the position that a presumption in favor of bilateral contracts exists.
[18]In the comment following section 31 of the Restatement the reason for such presumption is stated as follows: "It is not always easy to determine whether an offerer requests an act or a promise to do the act. As a bilateral contract immediately and fully protects both parties, the interpretation is favored that a bilateral contract is proposed."
[19]While the California cases have never expressly held that a presumption in favor of bilateral contracts exists, the cases clearly indicate a tendency to treat offers as offers of bilateral rather than of unilateral contracts. [20]Keeping these principles in mind, we are of the opinion that the offer of April 12 was an offer to enter into a bilateral as distinguished from a unilateral contract. Respondents argue that Mr. Whitehead had the right as offerer to designate his offer as either unilateral or bilateral. That is undoubtedly the law. It is then argued that from all the facts and circumstances it must be implied that what Whitehead wanted was performance and not a mere promise to perform. We think this is a non sequitur, in fact the surrounding circumstances lead to just the opposite conclusion. These parties were not dealing at arm's length. Not only were they related, but a very close and intimate friendship existed between them. The record indisputably demonstrates that Mr. Whitehead had confidence in Mr. and Mrs. Davis, in fact that he had lost all confidence in everyone else. The record amply shows that by an accumulation of occurrences Mr. Whitehead had become desperate, and that what he wanted was the promise of appellants that he could look to them for assistance. He knew from his past relationship with appellants that if they gave their promise to perform he could rely upon them. The correspondence between them indicates how desperately he desired this assurance. Under these circumstances he wrote his offer of April 12, above quoted, in which he stated, after disclosing his desperate mental and physical condition, and after setting forth the terms of his offer: "Will you let me hear from you as soon as possible---I know it will be a sacrifice but times are still bad and likely to be, so by settling down you can help me and Blanche and gain in the end." By thus specifically requesting an immediate reply Whitehead expressly indicated the nature of the acceptance desired by him, namely, appellants' promise that they would come to California and do the things requested by him. This promise was immediately sent by appellants upon receipt of the offer, and was received by Whitehead. It is elementary that when an offer has indicated the mode and means of acceptance, an acceptance in accordance with that mode or means is binding on the offerer.
[21]Another factor which indicates that Whitehead must have contemplated a bilateral rather than a unilateral contract, is that the contract required Mr. and Mrs. Davis to perform services until the death of both Mr. and Mrs. Whitehead. It is obvious that if Mr. Whitehead died first some of these services were to be performed after his death, so that he would have to rely on the promise of appellants to perform these services. It is also of some evidentiary force that Whitehead received the letter of acceptance and acquiesced in that means of acceptance.
[22]For the foregoing reasons we are of the opinion that the offer of April 12, 1931, was an offer to enter into a bilateral contract which was accepted by the letter of April 14, 1931 . . .
[23]For the foregoing reasons the judgment appealed from is reversed.
88 Questions
1.According to the court, what was the offer and what was the acceptance?
2.If, after Frank sent the April 14 letter, he and Caro had decided they couldn't leave Canada, would they have been in breach of contract? If, under those circumstances, Mr. Whitehead had sued them, would he have been successful? (This is the sort of thing you should think of before you accept a court's, or your opponent's, or your supervising attorney's characterization of the facts.)
3.The court discusses the fact that by leaving his business in Canada, Frank lost \$8,000. Is this important? Why or why not?
Problem 3-2
Queen Victoria's pet Welsh Corgi slips out of the palace and begins to try to make it back home to Wales. Heartbroken, the Queen places an advertisement offering a £100,000 reward to anyone who finds the cuddly little thing and returns him to her. Sherlock Holmes sees the ad and writes the following letter:
Your Majesty:
I promise to find your pet and return it to you.
Your servant,
(a)Under the rule articulated in R.2d §§ 30(2) and 32, has a contract been formed?
(b)Under the rule articulated in Davis v. Jacoby, has a contract been formed?
(c)Under the rule articulated in CISG article 18, has a contract been formed?
(d)Under the rule articulated in UNIDROIT article 2.1.6, has a contract been formed?
Problem 3-3
MercMart, Inc., "The Company," publishes a mail order catalogue in which it advertises "everything today's mercenary needs to be 100% combat effective." Among other things, the catalogue includes weapons, eavesdropping equipment, and how-to manuals on fighting, breaking and entering, and other criminal activities. You are general counsel for The Company and "The Boss" has asked your advice on the following matters.
89 (a)Colonel "Mad Mark" Slutzky entered into a contingent fee contract to carry out a revolution in Amerigo, an island nation. On March 1, he ordered 10,000 land mines from The Company, requesting immediate delivery. The land mines were shipped on March 5. That night the colonel had a dream in which an apparition told him "land mines are bad." He immediately called The Company and canceled the contract. The Company told him "Tough. We got a contract." True to The Company's culture, the person who talked to the colonel spoke first and thought about it later. Now she wants to know whether there in fact is a contract obligating the colonel to take the mines. Consult U.C.C. § 2--206 and advise her.
(b)When Mad Mark's order came in, The Boss immediately called Amerigo's government and offered to sell them 50,000 AK-47 assault rifles. The conversation got nowhere because The Boss and the Minister of Defense couldn't agree on the amount of the Minister's bribe. A short time later, the Minister of Defense sent in a written purchase order for 50,000 AK-47 rifles at MercMart's catalogue price "for immediate delivery." Because of materials shortages, The Company was unable to obtain 50,000 AK-47 assault rifles. Based on what Mad Mark had told The Company, The Boss knew that the government needed weapons immediately, so he shipped the American counterparts of the AK-47, the AR-15 (also known as the M-16). When the rifles arrived at Amerigo's secret warehouse in the United States, the government refused to accept them. The Company took them back and thought no more about it until it was served by Amerigo with a summons and complaint for breach of contract. The Boss says you should explain to the judge that there was no contract to breach because The Company never accepted the government's offer. What is your assessment of the strength of The Boss's position? See U.C.C. § 2--206(1)(b).
(c)If you concluded in Part (b) that The Company is in breach, how would you advise The Boss to avoid similar problems in the future?
Problem 3-4
Law Student has her first call-back interview on Friday. On Monday, she walks into the dry-cleaning establishment she normally patronizes and lays her best conservative, dress-for-success suit on the counter. The cheery clerk says: "Hi, Ms. Student. How are you today?"
Figuring it would be impolite to say that she's three weeks behind in all of her courses, she doesn't even know what's going on in a couple of them, and she thinks she's coming down with the flu, she lies and says: "Pretty good. How are you?"
"Great," says the clerk. "Wednesday OK?"
90 "That's fine," says Ms. Student as she walks out wondering if she'd be happier working there instead of a law office.
On Thursday, just before closing time, Ms. Student walks into the dry cleaners and the same friendly clerk is on duty. She returns Ms. Student's suit in the same condition it was in on Monday. Noting the startled look on Ms. Student's face, the clerk says: "The boss got sued last week, and now he hates all lawyers. He says we aren't going to do any cleaning for lawyers any more, and I guess that includes law students as well."
Ms. Student goes to the interview in her second-best outfit, one she knows is a little too trendy for the stodgy law firm where she wants to work. A few weeks later she hears that the people who interviewed her were impressed with her credentials but they thought the way she dressed indicated she "wouldn't fit in here."
Does she have a breach of contract action against the dry cleaner? If so, what was the offer and what was the acceptance?
Carlill v. Carbolic Smoke Ball Co.
Court of Appeal 1 Q.B. 256 (1893)7
APPEAL from decision of Hawkins, J.
[1]The defendants, who were the proprietors and vendors of a medical preparation called "The Carbolic Smoke Ball," inserted in the Pall Mall Gazette of November 13, 1891, and in other newspapers, the following advertisement:
"100£ reward will be paid by the Carbolic Smoke Ball company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. 1000£ is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.
During the last epidemic of influenza many thousand carbolic smoke balls were sold as preventives against this disease, and in no ascertained case was the disease contracted by those using the carbolic smoke ball.
One carbolic smoke ball will last a family several months, making it the cheapest remedy in the world at the price, 10s., post free. The ball can be refilled at a cost of 5s. Address, Carbolic Smoke Ball Company, 27, Princes Street, Hanover Square, London." 91 [2]The plaintiff, a lady, on the faith of this advertisement, bought one of the balls at a chemist's, and used it as directed, three times a day, from November 20, 1891, to January 17, 1892, when she was attacked by influenza. Hawkins, J., held that she was entitled to recover the 100£.8 The defendants appealed.
[3]Lindley, L.J. [The Lord Justice stated the facts, and proceeded.] The first observation I will make is that we are not dealing with any inference of fact. We are dealing with an express promise to pay 100£ in certain events. Read the advertisement how you will, and twist it about as you will, here is a distinct promise expressed in language which is perfectly unmistakable---"100£ reward will be paid by the Carbolic Smoke Ball company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball."
[4]We must first consider whether this was intended to be a promise at all, or whether it was a mere puff which meant nothing. Was it a mere puff? My answer to that question is No, and I base my answer upon this passage: "1000£ is deposited with the Alliance Bank, showing our sincerity in the matter." Now, for what was that money deposited or that statement made except to negative the suggestion that this was a mere puff and meant nothing at all? The deposit called in aid by the advertiser as proof of his sincerity in the matter that is, the sincerity of his promise to pay this 100£ in the event which he has specified. I say this for the purpose of giving point to the observation that we are not inferring a promise; there is the promise, as plain as words can make it.
[5]Then it is contended that it is not binding. In the first place, it is said that it is not made with anybody in particular. Now that point is common to the words of this advertisement and to the words of all other advertisements offering rewards. They are offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer. In point of law this advertisement is an offer to pay 100£ to anybody who will perform these conditions, and the performance of the conditions is the acceptance of the offer. That rests upon a string of authorities, the earliest of which is Williams v. Carwardine, which has been followed by many other decisions upon advertisements offering rewards.
[6]But then it is said, "Supposing that the performance of the conditions is an acceptance of the offer, that acceptance ought to have been notified." Unquestionably, as a general proposition, when an offer is made, 92 it is necessary in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified. But is that so in cases of this kind? I apprehend that they are an exception to that rule, or, if not an exception, they are open to the observation that the notification of the acceptance need not precede the performance. This offer is a continuing offer. It was never revoked, and if notice of acceptance is required---which I doubt very much, for I rather think the true view is that which was expressed and explained by Lord Blackburn the case of Brogden v. Metropolitan Ry. Co.---if notice of acceptance is required, the person who makes the offer gets the notice of acceptance contemporaneously with his notice of the performance of the condition. If he gets notice of the acceptance before his offer is revoked, that in principle is all you want. I, however, think that the true view, in a case of this kind, is that the person who makes the offer shows by his language and from the nature of the transaction that he does not expect and does not require notice of the acceptance apart from notice of the performance.
[7]We, therefore, find here all the elements which are necessary to form a binding contract enforceable in point of law, subject to two observations. First of all it is said that this advertisement is so vague that you cannot really construe it as a promise---that the vagueness of the language shows that a legal promise was never intended or contemplated. The language is vague and uncertain in some respects, and particularly in this, that the 100£ is to be paid to any person who contracts the increasing epidemic after having used the balls three times daily for two weeks. It is said, When are they to be used? According to the language of the advertisement no time is fixed, and, construing the offer most strongly against the person who has made it, one might infer that any time was meant. I do not think that was meant, and to hold the contrary would be pushing too far the doctrine of taking language most strongly against the person using it. I do not think that business people or reasonable people would understand the words as meaning that if you took a smoke ball and used it three times daily for two weeks you were to be guaranteed against influenza for the rest of your life, and I think it would be pushing the language of the advertisement too far to construe it as meaning that. But if it does not mean that, what does it mean? It is for the defendants to shew what it does mean; and it strikes me that there are two, and possibly three, reasonable constructions to be put on this advertisement, any one of which will answer the purpose of the plaintiff. Possibly it may be limited to persons catching the "increasing epidemic" (that is, then prevailing epidemic), or any colds or diseases caused by taking cold, during the prevalence of the increasing epidemic. That is one suggestion; but it does not commend itself to me. Another suggested meaning is that you are warranted free from catching this epidemic, or colds or other diseases caused by taking cold, whilst you are using this remedy after using it for two weeks. If that is the meaning, the plaintiff is right, for she used the 93 remedy for two weeks and went on using it till she got the epidemic. Another meaning, and the one which I rather prefer, is that the reward is offered to any person who contracts the epidemic or other disease within a reasonable time after having used the smoke ball. Then it is asked, What is a reasonable time? It has been suggested that there is no standard of reasonableness; that it depends upon the reasonable time for a germ to develop! I do not feel pressed by that. It strikes me that a reasonable time may be ascertained in a business sense and in a sense satisfactory to a lawyer, in this way; find out from a chemist what the ingredients are; find out from a skilled physician how long the effect of such ingredients on the system could be reasonably expected to endure so as to protect a person from an epidemic or cold, and in that way you will get a standard to be laid before a jury, or a judge without a jury, by which they might exercise their judgment as to what a reasonable time would be. It strikes me, I confess, that the true construction of this advertisement is that 100£ will be paid to anybody who used this smoke ball three times daily for two weeks according to the printed directions, and who gets the influenza or cold or other diseases caused by taking cold within a reasonable time after so using it; and if that is the true construction, it is enough for the plaintiff.
[8]Bowen, L.J. I am of the same opinion. We were asked to say that this document was a contract too vague to be enforced. [9]The first observation which arises is that the document itself is not a contract at all, it is only an offer made to the public. The defendants contend next, that it is an offer the terms of which are too vague to be treated as a definite offer, inasmuch as there is no limit of time fixed for the catching of the influenza, and it cannot be supposed that the advertisers seriously meant to promise to pay money to every person who catches the influenza at any time after the inhaling of the smoke ball. It was urged also, that if you look at this document you will find much vagueness as to the persons with whom the contract was intended to be made---that, in the first place, its terms are wide enough to include persons who may have used the smoke ball before the advertisement was issued; at all events, that it is an offer to the world in general, and, also, that it is unreasonable to suppose it to be a definite offer, because nobody in their senses would contract themselves out of the opportunity of checking the experiment which was going to be made at their own expense. It is also contended that the advertisement is rather in the nature of a puff or a proclamation than a promise or offer intended to mature into a contract when accepted. But the main point seems to be that the vagueness of the document shows that no contract whatever was intended. It seems to me that in order to arrive at a right conclusion we must read this advertisement in its plain meaning, as the public would understand it. It was intended to be issued to the public and to be read by the public. How would an ordinary person reading this document construe it? It was 94 intended unquestionably to have some effect, and I think the effect which it was intended to have, was to make people use the smoke ball, because the suggestions and allegations which it contains are directed immediately to the use of the smoke ball as distinct from the purchase of it. It did not follow that the smoke ball was to be purchased from the defendants directly, or even from agents of theirs directly. The intention was that the circulation of the smoke ball should be promoted, and that the use of it should be increased. The advertisement begins by saying that a reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic after using the ball. It has been said that the words do not apply only to persons who contract the epidemic after the publication of the advertisement, but include persons who had previously contracted the influenza. I cannot so read the advertisement. It is written in colloquial and popular language, and I think that it is equivalent to this: "will be paid to any person who shall contract the increasing epidemic after having used the carbolic smoke ball three times daily for two weeks." And it seems to me that the way in which the public would read it would be this, that if anybody, after the advertisement was published, used three times daily for two weeks the carbolic smoke ball, and then caught cold, he would be entitled to the reward. Then again it was said: "How long is this protection to endure? Is it to go on forever, or for what limit of time?" I think that there are two constructions of this document, each of which is good sense, and each of which seems to me to satisfy the exigencies of the present action. It may mean that the protection is warranted to last during the epidemic, and it was during the epidemic that the plaintiff contracted the disease. I think, more probably, it means that the smoke ball will be a protection while it is in use. That seems to me the way in which an ordinary person would understand an advertisement about medicine, and about a specific against influenza. It could not be supposed that after you have left off using it you are still to be protected forever, as if there was to be a stamp set upon your forehead that you were never to catch influenza because you had once used the carbolic smoke ball. I think the immunity is to last during the use of the ball. That is the way in which I should naturally read it, and it seems to me that the subsequent language of the advertisement supports that construction. It says: "During the last epidemic of influenza many thousand carbolic smoke balls were sold, and in no ascertained case was the disease contracted by those using" (not "who had used") "the carbolic smoke ball," and it concludes with saying that one smoke ball will last a family several months (which imports that it is to be efficacious while it is being used), and that the ball can be refilled at a cost of 5s. I, therefore, have myself no hesitation in saying that I think, on the construction of this advertisement, the protection was to ensure during the time that the carbolic smoke ball was being used. My brother, the Lord Justice who preceded me, thinks that the contract would be sufficiently definite if you were to read it in the sense the protection was to be warranted during a 95 reasonable period after use. I have some difficulty myself on that point; but it is not necessary for me to consider it further, because the disease here was contracted during the use of the carbolic smoke ball.
[10]A.L. Smith, L.J. The first point in this case is, whether the defendants' advertisement which appeared in the Pall Mall Gazette was an offer which, when accepted and its conditions performed, constituted a promise to pay, assuming there was good consideration to uphold that promise, or whether it was only a puff from which no promise could be implied, or, as put by Mr. Finlay, a mere statement by the defendants of the confidence they entertained in the efficacy of their remedy. Or as I might put in the words of Lord Campbell in Denton v. Great Northern Ry. Co., whether this advertisement was mere waste paper. That is the first matter to be determined. It seems to me that this advertisement reads as follows: "reward will be paid by the Carbolic Smoke Ball Company to any person who after having used the ball three times daily for two weeks according to the printed directions supplied with such ball contracts the increasing epidemic influenza, colds, or any diseases caused by taking cold. The ball will last a family several months, and can be refilled at a cost of 5s." If I may paraphrase it, it means this: "If you"---that is one of the public as yet not ascertained, but who, as Lindley and Bowen, L. JJ., have pointed out, will be ascertained by the performing the condition---"will hereafter use my smoke ball three times daily for two weeks according to my printed directions, I will pay you, if you contract the influenza within the period mentioned in the advertisement." Now, is there not a request there? It comes to this: "In consideration of your buying my smoke ball, and then using it as I prescribe, I promise that if you catch the influenza within a certain time I will pay you." It must not be forgotten that this advertisement states that as security for what is being offered, and as proof of the sincerity of the offer, is actually lodged at the bank wherewith to satisfy any possible demands which might be made in the event of the conditions contained therein being fulfilled and a person catching the epidemic so as to entitle him to the reward. How can it be said that such a statement as that embodied only a mere expression of confidence in the wares which the defendants had to sell? I cannot read the advertisement in any such way. In my judgment, the advertisement was an offer intended to be acted upon, and when accepted and the conditions performed constituted a binding promise on which an action would lie, assuming there was consideration for that promise.
Notes and Questions
1.In paragraph 4, Lord Justice Lindley states: " . . . as a general proposition, when an offer is made, it is necessary in order to make a binding Interpretation One
Accept the offer by purchasing a smoke ball. The terms of the contract are that the user gets the hundred pounds if he (1) uses the ball according to directions and (2) gets sick within a reasonable time thereafter.
Interpretation Two
Accept the offer by (1) purchasing a smoke ball and (2) using it according to directions. The terms of the contract are that the user gets the hundred pounds if they get sick within a reasonable time thereafter.
Interpretation Three
To accept the offer, a user must (1) purchase the smoke ball, (2) use it according to directions, and (3) get sick within a reasonable time thereafter.
Assume the offer was withdrawn on January 1. (For purposes of this question, assume that an offer which can be accepted by performance can be revoked at any time before performance is complete. As we'll see later, this is no longer the law in most jurisdictions.)
A purchased the ball on November 15, used it according to directions, completing her two week minimum use on November 29, and got the flu on December 15. Under which of these interpretations would she be allowed to recover the l00 pounds?
B purchased the ball on December 15, used it according to directions, completing her two week minimum use on December 29, and got the flu on January 15. Under which of these interpretations would she be allowed to recover the 100 pounds?
C purchased the ball on December 20, used it according to directions, completing her two week minimum use on January 4, and got the flu 97 on January 7. Under which of these interpretations would she be allowed to recover the 100 pounds?
3.Making a silk purse out of a sow's ear. The Carbolic Smoke Ball case is well known and a staple of Contracts courses. Less well known is the company's next move. In a subsequent advertisement, on February 15, 1893, the company renewed and increased its offer, albeit with some careful drafting and limitations, both legal and practical, on liability:
£100 REWARD was recently offered by the CARBOLIC SMOKE BALL CO. to anyone who contracted influenza [or various other diseases] after having used the Carbolic Smoke Ball according to the printed directions. Many thousand Carbolic Smoke Balls were sold, but only three persons claimed the reward of £100, thus proving conclusively that this invaluable remedy will prevent and cure the above-mentioned diseases.
THE CARBOLIC SMOKE BALL CO., Ltd., now offers £200 REWARD to the person who purchases a Carbolic Smoke Ball and afterwards contracts any of the following diseases, viz, INFLUENZA. . . . or any disease caused by taking cold while using the Carbolic Smoke Ball.
This offer is made to those who have purchased a Carbolic Smoke Ball since January 1, 1893, and is subject to conditions to be obtained upon application, a duplicate of which must be signed and deposited with the Company in London by the applicant before commencing the treatment specified in the conditions [including having to take the three doses each day at corporate headquarters]. This offer will remain open only until March 31, 1893.
Problem 3-5
Jeff had a boathouse on a remote lake. He heard there had been several incidents of vandalism in the area, so, on January 10, he posted a letter to a contractor he knew in a small town near the lake:
Marcia,
I need a chain link fence with a locked gate around my boathouse. If you can do it for less than \$2,500, please start immediately and send me the bill. Use your own judgment as to things like height, placement, etc.
Jeff
Marcia began construction on January 12, as soon as she got the letter (business at the lake is slow in the winter), and she finished two days later. Marcia had become a contractor because she liked building things more than she liked doing paperwork, so she hadn't gotten around to sending a bill (or otherwise telling Jeff she had done the job) before she received his fax on 98 January 30 telling her not to build the fence because he was going to sell the boathouse and didn't want "an ugly fence" around it.
(a)Do the parties have a contract? See R2d § 54 and UNIDROIT article 2.1.6.
(b)If the parties do have a contract, does Jeff have to pay?
There are a number of issues here, so don't jump to conclusions.
The "Mailbox Rule"
A very important, but very basic rule of contract law is the so-called "mailbox rule" or the rule of Adams v. Lindsell. The following passages from Morrison v. Thoelke, 155 So.2d 889 (Fla.Ct.App.1963), present the rule and its origins.
* * *
[1]A . . . leading treatise on the law of contracts, Corbin, Contracts §§ 78 and 80 (1950 Supp. 1961), also devotes some discussion to the "rule" urged by appellants. Corbin writes:
Where the parties are negotiating at a distance from each other, the most common method of making an offer is by sending it by mail; and more often than not the offeror has specified no particular mode of acceptance. In such a case, it is now the prevailing rule that the offeree has power to accept and close the contract by mailing a letter of acceptance, properly stamped and addressed, within a reasonable time. The contract is regarded as made at the time and place that the letter of acceptance is put into the possession of the post office department.
[2]Corbin negates the effect of the offeree's power to recall his letter:
The postal regulations have for a long period made it possible for the sender of a letter to intercept it and prevent its delivery to the addressee. This has caused some doubt to be expressed as to whether an acceptance can ever be operative upon the mere mailing of the letter, since the delivery to the post office has not put it entirely beyond the sender's control.
It is believed that no such doubt should exist . . . In view of common practices, in view of the difficulties involved in the process of interception of a letter, and in view of the decisions and printed discussions dealing with acceptance by post, it is believed that the fact that a letter can be lawfully intercepted by the sender should not prevent the acceptance from being operative on mailing. If the offer was made under such circumstances that the offeror should know that the offeree might reasonably regard this 99 as a proper method of closing the deal, and the offeree does so regard it, and makes use of it, the contract is consummated even though the letter of acceptance is intercepted and not delivered.
[3]The rule that a contract is complete upon deposit of the acceptance in the mails, hereinbefore referred to as "deposited acceptance rule" and also known as the "rule in Adams v. Lindsell,"10 had its origin, insofar as the common law is concerned, in Adams v. Lindsell, 1 Barn. & Ald. 681, 106 Eng.Rep. 250 (K.B. 1818). . . .
[4]Examination of the decision in Adams v. Lindsell reveals three distinct factors deserving consideration. The first and most significant is the court's obvious concern with the necessity of drawing a line, with establishing some point at which a contract is deemed complete and their equally obvious concern with the thought that if communication of each party's assent were necessary, the negotiations would be interminable. A second factor, again a practical one, was the court's apparent desire to limit but not overrule the decision in Cooke v. Oxley, 3 T.R. 653 (1790) that an offer was revocable at any time prior to acceptance. In application to contracts negotiated by mail, this latter rule would permit revocation even after unqualified assent unless the assent was deemed effective upon posting. Finally, having chosen a point at which negotiations would terminate and having effectively circumvented the inequities of Cooke v. Oxley, the court, apparently constrained to offer some theoretical justification for its decision, designated a mailed offer as "continuing" and found a meeting of the minds upon the instant of posting assent. Significantly, the factor of the offeree's loss of control of his acceptance is not mentioned.
[5]The justification for the "deposited acceptance" rule proceeds from the uncontested premise of Adams v. Lindsell that there must be, both in practical and conceptual terms, a point in time when a contract is complete. In the formation of contracts inter presents this point is readily reached upon expressions of assent instantaneously communicated. In the formation of contracts inter absents by post, however, delay in communication prevents concurrent knowledge of assent and some point must be chosen as legally significant. The problem raised by the impossibility of concurrent knowledge of manifest assent is discussed and a justification for the traditional rule is offered in Corbin, Contracts § 78 (1950).
A better explanation of the existing rule seems to be that in such cases the mailing of a letter has long been a customary and expected way of accepting the offer. It is ordinary business usage. More than this, however, is needed to explain why the letter is operative on mailing rather than on receipt by the offeror. Even 100 though it is business usage to send an offer by mail, it creates no power of acceptance until it is received. Indeed, most notices sent by mail are not operative unless actually received.
The additional reasons for holding that a different rule applies to an acceptance and that it is operative on mailing may be suggested as follows: When an offer is by mail and the acceptance also is by mail, the contract must date either from the mailing of the acceptance or from its receipt. In either case, one of the parties will be bound by the contract without being actually aware of that fact. If we hold the offeror bound on the mailing of the acceptance, he may change his position in ignorance of the acceptance; even though he waits a reasonable time before acting, he may still remain unaware that he is bound by contract because the letter of acceptance is delayed, or is actually lost or destroyed, in the mails. Therefore this rule is going to cause loss and inconvenience to the offeror in some cases. But if we adopt the alternative rule that the letter of acceptance is not operative until receipt, it is the offeree who is subjected to the danger of loss and inconvenience. He cannot know that his letter has been received and that he is bound by contract until a new communication is received by him. His letter of acceptance may never have been received and so no letter of notification is sent to him; or it may have been received, and the letter of notification may be delayed or entirely lost in the mails. One of the parties must carry the risk of loss and inconvenience. We need a definite and uniform rule as to this. We can choose either rule; but we must choose one. We can put the risk on either party; but we must not leave it in doubt. The party not carrying the risk can then act promptly and with confidence in reliance on the contract; the party carrying the risk can insure against it if he so desires. The business community could no doubt adjust itself to either rule; but the rule throwing the risk on the offeror has the merit of closing the deal more quickly and enabling performance more promptly. It must be remembered that in the vast majority of cases the acceptance is neither lost nor delayed; and promptness of action is of importance in all of them. Also it is the offeror who has invited the acceptance.
[6]The justification suggested by Corbin has been criticized as being anachronistic. Briefly, critics argue that the evident concern with risk occasioned by delay is premised on a time lag between mailing and delivery of a letter of acceptance, which lag, in modern postal systems is negligible. Opponents of the rule urge that if time is significant to either party, modern means of communication permit either party to avoid such delay as the post might cause. See Samek, A Reassessment of the Present Rule Relating to Postal Acceptance, supra. Cf. Rhode Island Tool Co. v. United [7]Another justification offered for the rule, related to the argument of expediency discussed by Corbin, is the mixed practical and conceptual argument attributed to Holmes but in reality being manifest in Adams v. Lindsell itself. See Holmes, The Common Law, 305--307 (1881); Note, 38 Geo. L.J. 106, 110 (1949). This argument proposes that the making of an offer constitutes an expression of assent to the terms of the contract and that the "overt act" of depositing a written acceptance in the post represents the offeror's assent, whereupon the "concluding prerequisite" of a contract, mutual assent, is formed and the contract is complete. Critics of the rule respond by pointing out that the deposit of a letter in the mail is, in and of itself, a neutral factor, charged with legal significance only because the rule makes this particular "overt act" significant: signing a contract but then pocketing it could be, they argue, viewed as equally conclusive.
[8]At this point and upon the "overt act" theory issue is clearly joined. On the one hand proponents of the rule insist that contracts inter absentes are sui generis and require consideration not in terms of the secondary principles of contract law relating to the necessity of communicating assent and the necessity of an unrecoverable expression of acceptance, but in terms of the essential concept of manifest intent and assent. Opponents of the rule, though no longer encountering conceptual difficulty in the abandonment of the principle of communication, compare Langdell, Summary of Law of Contracts, 1--31 (2d ed. 1880) and Williston, Contracts § 81 (1957) with Samek, A Reassessment . . . supra, argue that absent overriding practical considerations the law relating to acceptance by mail should be harmonized with the law regarding offers by mail and contracts generally, i.e., that the acceptance is ineffective until received. Ultimately then the weight given the "practical considerations" and the emphasis accorded the reliance---expectation factors determine the view adopted as to the "deposited acceptance" rule.
[9]In support of the rule proponents urge its sanction in tradition and practice. They argue that in the average case the offeree receives an offer and, depositing an acceptance in the post, begins and should be allowed to begin reliance on the contract. They point out that the offeror has, after all, communicated his assent to the terms by extending the offer and has himself chosen the medium of communication. Depreciating the alleged risk to the offeror, proponents argue that having made an offer by post the offeror is seldom injured by a slight delay in knowing it was accepted, whereas the offeree, under any other rule, would have to await both the transmission of the acceptance and notification of its receipt before being able to rely on the contract he unequivocally accepted. Finally, 102 proponents point out that the offeror can always expressly condition the contract on his receipt of an acceptance and, should he fail to do so, the law should not afford him this advantage.
[10]Opponents of the rule argue as forcefully that all of the disadvantages of delay or loss in communication which would potentially harm the offeree are equally harmful to the offeror. Why, they ask, should the offeror be bound by an acceptance of which he has no knowledge? Arguing specific cases, opponents of the rule point to the inequity of forbidding the offeror to withdraw his offer after the acceptance was posted but before he had any knowledge that the offer was accepted; they argue that to forbid the offeree to withdraw his acceptance, as in the instant case, scant hours after it was posted but days before the offeror knew of it, is unjust and indefensible. Too, the opponents argue, the offeree can always prevent the revocation of an offer by providing consideration, by buying an option.
[11]In short, both advocates and critics muster persuasive argument. As Corbin indicated, there must be a choice made, and such choice may, by the nature of things, seem unjust in some cases. Weighing the arguments with reference not to specific cases but toward a rule of general application and recognizing the general and traditional acceptance of the rule as well as the modem changes in effective long-distance communication, it would seem that the balance tips, whether heavily or near imperceptively, to continued adherence to the "rule in Adams v. Lindsell." This rule, although not entirely compatible with ordered, consistent and sometime artificial principles of contract advanced by some theorists, is, in our view, in accord with the practical considerations and essential concepts of contract law. See Llewellyn, Our Case-Law of Contracts; Offer and Acceptance 11, 48 Yale L.J. 779, 795 (1939). Outmoded precedents may, on occasion, be discarded and the function of justice should not be the perpetuation of error, but, by the same token, traditional rules and concepts should not be abandoned save on compelling ground.
Notes and Questions
1.As the Morrison v. Thoelke court points out in paragraph 6, the mailbox rule was developed when postal service was subject to long delays and even uncertain eventual delivery. As such, should it apply today to first class mail? What about express mail or overnight mail services? Why or why not?
2.Should the mailbox rule apply to e-mail, voicemail, or instant messaging? Why or why not? When is a communication that is sent by any of these methods "received"? When it "hits" the addressee's system? Or when it is actually read or heard? Some other time?
103 3.Remember, the mailbox rule is a default rule and, the offeror, as the master of the offer, can specify the manner of acceptance and when it is effective. Only if she is silent does the mailbox rule apply.
Problem 3-6
Seller writes Buyer: "I will sell you my Franklin Mint plate commemorating The Life of Elvis for \$400. This offer will expire at noon on July 4." Buyer writes back: "I accept your offer." Buyer's letter is mailed on July 4 at 11 a.m., but because the post office is closed on July 4, it is not postmarked until 2 p.m. on July 5. Do the parties have a contract?
Problem 3-7
Seller writes Buyer: "I will sell you my Sammy Sosa rookie card for \$100. This offer will expire on September 18. Your answer must be in my hands by that date." Buyer mails her acceptance on September 17. Seller receives it on September 19. Do they have a contract? Problem 3-8
Mr. Kenge sends John Jarndyce an e-mail message offering to convert his fee arrangement in Jarndyce v. Jarndyce from hourly billing to a contingency fee. The message states: "This offer will expire at noon tomorrow." At eleven the next morning, Mr. Jarndyce, having cogitated on the offer whilst he took his tea, boots up his computer and sends Mr. Kenge a message purporting to accept the offer. Unfortunately, though neither party knew it, Mr. Jarndyce's internet provider, England On-Line, has suffered a server crash. As a result the message is not delivered for three days. In the meantime, Kenge & Carboy, assuming that Jarndyce has rejected their offer and that they will therefore be able to bill Jarndyce v. Jarndyce as they always had, hires a new associate. Does Jarndyce have a contract to change the billing arrangement? See R2d §§ 63, 64, 67.
Section 15(a) of the Uniform Electronic Transactions Act provides:
Unless otherwise agreed between the sender and the recipient, an electronic record is sent when it:
(1)is addressed properly or is otherwise directed properly to an information processing system that the recipient has designated or uses for the purpose of receiving electronic records or information of the type sent and from which the recipient is able to retrieve the electronic record;
(2)is in a form capable of being processed by that system; and
(3)enters an information processing system outside the control of the sender or of a person that sent the record on behalf of the 104 sender or enters a region of the information processing system designated or used by the recipient which is under the control of the recipient.
In the context of providing adequate notice to someone, e-mail, text message, and other forms of electronic notification are common to our 21st Century society. However, they are not without problems, as Justice William W. Bedsworth points out in Lasalle v. Vogel, 2019 WL 2428668, at *8 (Cal. Ct. App. June 11, 2019):
Email has many things to recommend it; reliability is not one of them. Between the ease of mistaken address on the sender's end and the arcane vagaries of spam filters on the recipient's end, email is ill-suited for a communication on which a million dollar lawsuit may hinge. A busy calendar, an overfull in-box, a careless autocorrect, even a clumsy keystroke resulting in a "delete" command can result in a speedy communication being merely a failed one.
Problem 3-9
On March 1, Farmer writes Developer: "I hereby offer to sell you the property known as the 'Jones Farm' for a price of \$500,000." Developer receives the letter on March 4. On March 5, Farmer changes her mind and mails (by the U.S. Postal Service) Developer the following: "My offer to sell the farm is hereby revoked." On March 6, Developer mails (by the U.S. Postal Service) a letter purporting to accept the offer. On March 7, Developer receives Farmer's revocation letter. On March 8, Farmer receives Developer's acceptance letter.
Do the parties have a contract? See R2d § 42, UNIDROIT article 2.1.4.
Problem 3-10
B has been admiring A's collection of baseball cards. B tells A [communication #1]: "If you ever decide to get rid of your Johnny Bench rookie card, I'll trade you my Hank Aaron signed bat." A says he wouldn't part with the Johnny Bench rookie card for a million dollars [communication #2]. A couple of weeks later, however, A changes his mind and sends B the following email [communication #3]: "I've changed my mind. I'll trade the Bench rookie card on the terms you suggested. If I don't hear otherwise by two weeks from today, I'll assume we have a deal and I'll ship."
B gets the e-mail and decides she's no longer so interested in baseball cards. She plans to e-mail A rejecting the offer, but forgets to do so. On the day he said he would, A mails the rookie card to B (insured for \$10,000) [communication #4]. Immediately upon receiving the card, B re-wraps it for mailing and encloses a letter saying that she never agreed to the swap. Once again she gets sidetracked with other projects and it's three more weeks until she gets around to mailing the package [communication #5]. When A gets the package he is irate. He thought he had a contract, and he sues B for breach of contract. A wants that bat.
105 How should the court decide the case? Consider R2d §§ 56 and 69, CISG article 18, UNIDROIT articles 2.1.2--2.1.7.
Note
Recently, in the debates at the American Law Institute (ALI) regarding the proposal to approve the first Restatement of the Law of Consumer Contracts (RLCC), there were various disagreements among members. However, the primary and most polarizing disagreement involved whether a consumer can assent to terms of an agreement of which he or she is unaware, but of which he or she had reasonable notice of their existence?
Today, consumers regularly consent to the terms of website and software agreements without reading or even looking at the terms that they are agreeing to. Consumers simply click "I agree" and move on with their lives. As a result, some members of the ALI decided businesses should not be required to provide consumers with the option to assent to their terms. Instead, the drafters of the RLCC proposed that if a consumer receives reasonable notice that the agreement exists, and he or she has "a reasonable opportunity to review" those terms, then the consumer is bound by those terms.
The RLCC has attracted heavy criticism from consumer advocates, state attorney generals, politicians, and even major businesses. These opponents argue that the RLCC recommends a new, separate set of contract rules for consumers. Rules not supported by case law precedent or statute. Opponents argue these proposed rules would bind consumers to a website's terms, regardless of whether the consumer agrees to them or even knows they exist. These opponents contend that rules like this undermine the most basic and fundamental principles of contract law.
The Drafters of the RLCC argue the document does not create new contract rules. Rather, the RLCC provides courts and legislatures with a synthesized guide based on current trends in the law and common law precedent.
However, opponents argue that the RLCC is based on a flawed interpretation of the common law doctrine regarding electronic adhesion contracts. As Professor Nancy S. Kim points out:
Some courts have started to question whether a manifestation of assent is enough to show consent to all the terms, showing signs of requiring specific assent to important, rights-altering terms like mandatory arbitration or recurring fee provisions. In other words, recent cases seem to be swinging the pendulum back toward reasonable expectations, or at least away from unconsented-to terms.
Nancy S. Kim, The Proposed Restatement of the Law of Consumer Contracts and the Struggle Over the Soul of Contract Law, Jurist---Academic Commentary, June 2, 2019. 106 Professor Kim notes that numerous cases that the drafters cite in support of the Restatement, have "overlooked the many factual distinctions that influence [the] holdings."
Many attorneys argue that RLCC ignores that there is no manifestation of assent by the consumer to be bound by the specific terms of the agreement. They emphasize that the ALI is proposing a fundamental shift away from the traditional contract-law premise that silence does not amount to assent.
Perhaps the drafters of the RLCC are creating new rules. Or maybe they are applying the same rule differently for contracts between businesses and consumers, and contracts between businesses and businesses. If it is the former, the RLCC ignores the consumer's lack of assent to the terms of the business's agreement; a concept that would likely never constitute a binding agreement between two businesses.
Ultimately, after debating the proposed RLCC for over four hours in 2019, the ALI tabled the proposal for a year.
Lawyering Skills Problem
Sherri was a senior partner in a large law firm. After 25 years of practicing law, she was very wealthy. But she was also burned-out and totally fed up with the practice of law. She wasn't ready to retire, but she wanted to find another career. She had always enjoyed skiing, so she decided that a ski resort would be the ideal business for her.
Among her many contacts was Mario, who was a business broker. He was in the business of helping people like Sherri find businesses to buy. On November 5, when she was cleaning up her desk after a hard day of negotiating on behalf of clients, Sherri wrote Mario the following e-mail:
Mario:
How's my favorite broker? Doing any deals lately?
I've decided to hang it up with the practice of law. I'm going to buy a ski resort. You can make a quick hundred grand if you can find me one that meets my needs. I can pay as much as ten million for the right place if I can get the financing I need.
If you find me the right property, I'll pay you a commission of up to \$100,000. I know this is less than you're used to getting, but we're old friends, and I promise that I'll be easy to deal with.
If this is OK, let me know. I'm not going to work with any other brokers, just you. You don't have to commit to spend a lot of time on the deal. Just check out the market and you may earn a quick hundred grand.
Sher
BTW---Disregard the stuff below this. The firm's server puts that on all the e-mails. Don't you just love paranoid lawyers? ;-)
107 This communication was sent by the law firm of Cardozo, Gonzales, Chang & Weinstein. It may contain confidential information protected by the attorney-client privilege. If you believe you have received this communication in error, destroy all copies and immediately telephone the sender.
This communication does not reflect an intention by the sender or the sender's client to conduct a transaction or make any agreement by electronic means. Nothing contained in this message or in any attachment shall satisfy the requirements for writing and nothing contained herein or therein shall constitute a contract or a signature.
When Mario got the e-mail, he ignored it because he wasn't interested in ski resorts. He had a couple of hot bio-tech deals going and he wasn't going to be distracted from them for a deal that could only bring him a hundred grand.
About a week later, however, (November 15 to be exact) the weather turned cold and Mario's mind turned to snowboarding. He decided that he would play around with Sherri's idea. He began an intensive study of the winter resort industry. It was mostly to satisfy his own curiosity, but he was thinking there was the possibility he might by chance run across something that would be suitable for Sherri. As sometimes happens, he got carried away with the project and he began spending an inordinate amount of time looking for a deal for Sherri. Finally, he discovered a resort that was exactly what Sherri was looking for. It was a small resort that drew customers from a nearby city. It didn't have much challenging terrain. In fact, it didn't have much terrain at all. But what can you expect for a lousy ten million? Mario first learned of the availability of the resort on November 22, after spending all of that day and most of the previous two days searching on the Internet, telephoning real estate brokers in the mountainous areas of seven states, and checking out a lot of resorts that turned out to be unsuited to Sherri's needs.
On November 23, he sent the following e-mail to Sherri:
Sher:
Found a great property for you. The owner wants too much for it, of course. They always do. But I'm confident we can get him down to your max price and probably a bit below. The geezer is getting old and he wants to retire to Mexico.
Details to follow by snail mail.
Best, Mario
In the meantime, on November 22, Sherri, infuriated by Mario's lack of response to her earlier e-mail and wanting to have tangible written confirmation of her position, Sherri sent the following letter to Mario by the United States Postal Service (registered mail):
108 Dear Mr. O'Riley:
You have failed to respond as requested to my electronic mail message of November 5. Accordingly, I hereby withdraw any offer which I may have made to you in that message or any other way.
Please direct all future communications to the attorney representing me in this matter, Ralph J. Cardozo, Esq.
Very truly yours, S. Weinstein, Esq.
Mario received the letter on November 25.
Mario, of course, demanded his \$100,000.
Sheri has come to you seeking advice as to whether or not she owes the \$100,000 commission. Although Mr. Cardozo has given her his opinion that she does not, she wants someone who will not be paid to litigate the case and is thus more unbiased to give her a legal opinion.