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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

CHAPTER 3 ACCEPTANCE AND REJECTION OF OFFER

1-3 Corbin on Contracts § 3.20

§ 3.20 Belated or Conditional Acceptance Followed by Offeror's Silence

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In some cases it has been held that if one who has received an offer makes a counter-offer, the mere silence of the original offeror is not operative as an acceptance of the counter-offer.n1 A similar problem is raised by a late acceptance; and the authorities are not entirely in harmony. If a definite time is fixed for acceptance, the offeree knows when a purported acceptance is later than the time specified and whether the power of acceptance has expired. In such a case, there seems to be no reason to give to a belated attempt any effect other than that of a counter-offer.n2 But where no time was specified and the time limit is merely that indefinite period called a ''reasonable time,''n3 it is suggested that, if the offeree believed that the power of acceptance was being exercised before the power ceased, and the offeror had reason to know that fact, the silence of the offeror should complete a contract.n4 This is not because silence in such case is an acceptance of a counter-offer, but because the offeror has reason to know that the offeree thinks there is a contract and is likely to act in reliance on it, and it is easy for the offeror to warn the offeree that there is no contract. Although, as thus stated, the rule operates to protect the offeree, it also protects an offeror who may rely on the late acceptance.n5

A case that might be thought analogous may here be distinguished. If an offer is couched in such terms that it may reasonably be understood in either of two ways the offeree may, perhaps, be able to hold the offeror in accordance with the meaning that he or she gives it in good faith. At all events, it has been said that, if the offeree writes to the offeror showing that the offeree has given the offer one meaning rather than the other, the offeror is bound accordingly by the acceptance that follows if the offeror does not at once give notice that such was not the meaning intended.n6 In this case it may well be that the offeror would be bound hard and fast even if no inquiry had been made as to the meaning the offeror intended. But if the offer was not in fact ambiguous, the offeror's silence should not be held to be an operative acceptance of the counter-offer adopting an unreasonable meaning.

In Krause v. Buttino, n7 the defendant was tenant of a farm under a lease ending on February 28, at a rental of $1,200. The owner insisted on an increased rental for a renewal, and with a letter to that effect enclosed a new lease at $1,500. On February 6, the tenant returned the lease properly signed, but with the $1,500 stricken out and $1,200 substituted. He wrote that this was the best he could do, enclosed his check for $1,200, and asked for a reply ''yes or no.'' The owner made no reply until March 12 (12 days after expiration of the lease), when he returned the lease and the check. The court held that this showed no acceptance of the tenant's counter-offer, and also that it did not operate as an acquiescence in the tenant's holding over under the old lease. The tenant had not objected to the return of the check.

Some cases have stated that the offeror can ''waive'' a late acceptance.n8 In some such cases, the court did not focus on the analytic distinction between waiver and acceptance of a counter-offer. However, in Sabo v. Fasano, n9 the court stated that a ''waiver'' rationale was sounder, because, quoting the Restatement (Second), a counter-offer ''proposes 'a substituted bargain differing from that proposed by the original offer.'''n10 By this definition, which appears to be too restrictive, the late acceptance can be viewed as a new offer rather than as a counter-offer. The court argues that because contract terms can be waived, so can the deadline for acceptance of an offer. The distinction between a contract and an offer is lost in the court's analysis. The court makes much of the fact that the offeror communicated the waiver of the lateness of the acceptance by word and deed. If, in the court's view, a waiver is ineffective without communication of it within a reasonable time, it is unimportant on the facts of the case what analytic rationale is applied.

Legal Topics:

For related research and practice materials, see the following legal topics:

Contracts LawFormationAcceptanceMethods of AcceptanceSilenceContracts LawFormationOffersGeneral OverviewContracts LawFormationCounteroffers

FOOTNOTES:

(n1)Footnote 1.

U.S. - Columbia Malting Co. v. Clausen-Flanagan Corp., 3 F.2d 547 (2d Cir.1924) .

Ky. - Cincinnati Equipment Co. v. Big Muddy River Consol. Coal Co., 158 Ky. 247, 164 S.W. 794 (1914) , unless expressly so agreed.

In Anders v. Georgetown College, Inc., 286 S.W.2d 78 (Ky.1955) , the plaintiff, a college teacher, demanded a salary raise to $4,000. The college replied, offering $3,800. He made no reply to this offer, although he did not reject it. This was held not to constitute a contract of employment. His silence did not operate as acceptance.

Me. - Jenness v. Mt. Hope Iron Co., 53 Me. 20 (1864) . The court said: ''It is highly probable that when the defendants received the plaintiff's order of October 27, they intended to fill it; otherwise they should have notified him and not by their silence left him to infer that the nails would be forwarded, when they had no intention of doing it. And if such an intention would be sufficient to complete the contract, and render it binding upon the parties, we might, perhaps, feel justified in inferring it from the defendant's silence, and other facts testified to by the plaintiff. But we are not satisfied that such an intention, locked up in the breast of a party, and not communicated to the other, is sufficient in any case to constitute such an acceptance of a proposition as to create a binding contract. We think it would not.'' If the plaintiff reasonably made such inference and the defendant should have known that he would make it, the court ought to hold that a contract was made.

Mich. - Bowen v. McCarthy, 85 Mich. 26, 48 N.W. 155 (1891) .

Or. - C.R. Shaw Wholesale Co. v. Hackbarth, 102 Or. 80, 201 P. 1066 (1921) .

Pa. - Blaisdell Filtration Co. v. Bayard & Co., 311 Pa. 6, 166 A. 234 (1933) .

Wis. - Todorovich v. Kinnickinnic M.L. & Bldg. Ass'n, 238 Wis. 39, 298 N.W. 226, 135 A.L.R. 818 (1941) .

In 30 L.Q.R. 4, Sir Frederick Pollock says: ''It seems clear that the belated acceptance, however little belated, concluded nothing, and what passed later is only evidence of a new agreement on the same terms.''

The American Law Institute agrees with this. See Restatement, Contracts § 73. Restatement (Second) of Contracts § 70 reads as follows: ''A late or otherwise defective acceptance may be effective as an offer to the original offeror, but his silence operates as an acceptance in such a case only as stated in § 69.'' The pertinent provision of § 69 is subd. 1(b) which mandates that silence is acceptance ''Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.'' (Emphasis supplied).

(n2)Footnote 2.

U.S. - Kurio v. United States, 429 F.Supp. 42 (S.D.Tex.1970) , noted under § 2.14.

In the case of Maclay v. Harvey, 90 Ill. 525, 530 (1878) , where the plaintiff mailed her acceptance two days later than by return mail as requested, the court said: ''Appellant seeks to recover upon the strict letter of a special contract, and it is, therefore, incumbent on her to prove such contract. It is required of her, as we have seen, to prove an acceptance of appellee's offer within the time to which it was limited-that is to say, by the placing in the post-office of an answer unequivocally accepting the offer in time for the return mail, which she did not do. Appellee was, thereafter, under no obligation to regard the contract as closed. He might, it is true, have done so, but he was not legally bound in that respect, nor was he legally bound to notify appellant that her acceptance had not been signified within the time to which his offer was limited. She is legally chargeable with knowledge that her acceptance was not in time, and in order to fix a liability thereby upon appellee, it was incumbent upon her, before assuming that appellee waived this objection, to ascertain that he in fact did so.'' In accord is Ferrier v. Storer, 63 Iowa 484, 19 N.W. 288 (1884) .

Of course the offeror has power to consummate the contract by affirmative actions or expression of assent. Kansas City v. Industrial Gas Co., 138 Kan. 755, 28 P.2d 968 (1934) .

In W.B. Leedy & Co. v. Shirley, 97 Ga.App. 801, 104 S.E.2d 580 (1958) , an offer specified a time limit for acceptance. An acceptance after that date, with performance actually begun by the parties, operated to consummate a contract in accordance with the other terms of the offer.

(n3)Footnote 3. On the question of what is a reasonable time, Restatement (Second) § 70 comment b states ''the failure of the original offeror to object to an acceptance and his subsequent preparations for performance may be evidence that the acceptance was made within a reasonable time.''

(n4)Footnote 4.

Me. - Phillips v. Moor, 71 Me. 78 (1880) .

Morrell v. Studd, [1913] 2 Ch. 648 , is closely similar; and it was held that a contract existed.

In Milliken-Tomlinson Co. v. American Sugar Refining Co., 9 F.2d 809 (1st Cir.1925) , reh'g denied, 10 F.2d 973 , eight acceptances of plaintiff's offers to buy were allegedly dispatched too late. The offeror-buyer took and paid for deliveries under five of the eight orders, without protest, but refused to take deliveries under three of them. It was held that the defendant-buyer's conduct constituted a waiver of the lateness of the acceptances.

The rule adopted in the German Civil Code, sec. 149; Jap.Civ.Code, art. 522; Swiss Code of Obligations, § 5, is that in case the acceptance was started on time but is unexpectedly delayed thereafter, the late acceptance is good unless the offeror at once sends notice that he is not bound. Also, a late acceptance is regarded as a counter-offer.

''If an acceptance arrives out of time, though it has been transmitted to the offeror in such manner that it would have arrived in due time with ordinary forwarding, and the offeror must have recognized this on receipt of the acceptance he shall without delay notify the acceptor of the delay, unless this has already been done. If he delay so to notify him the acceptance is deemed not to have been out of time.'' German Civil Code, sec. 149. It should be borne in mind that these rules are imbedded in a system under which acceptances of offers take effect on receipt.

(n5)Footnote 5. George Tomlinson & Son Co. v. Lennon, 46 R.I. 148, 125 A. 266 (1924) .

(n6)Footnote 6. In the case of Dickey v. Hurd, 33 F.2d 415 (1st Cir.1929) , cert. denied, 280 U.S. 601 , an offer was made as follows: ''My deeds call for 1266 acres, and I will sell the same to you for $15 per acre cash and give you till July 18 to accept this offer.'' The offeree understood this to mean that he might accept it by sending a notice of acceptance, thus making a bilateral contract, and not that the acceptance must consist of the payment of the purchase price by July 18, making a unilateral contract. The offer was accepted by telegram on July 17. Five days later the offeror notified the offeree that the terms of the offer had not been complied with. Several days prior to the acceptance the offeree had written to the offeror clearly indicating that he understood the offer to mean that acceptance by July 18 was to be by giving notice, and not by making a payment in cash. The court said that the terms of the offer were equivocal, and that there would have been a valid bilateral contract but for the fact that the acceptance was not unconditional. The court said: ''When Mr. Hurd received these communications, he was fully apprised of how Mr. Dickey understood the language of his offer; and if that was not the meaning which he intended to give it, it was his duty to have at once informed him that the offer called for payment of the price on or before the 18th of July, and not merely for a notice of acceptance. It was not open to him to lie quietly by until after the time for acceptance had expired and then say, 'my offer calls for payment of the price on or before July 18, and you have not met the requirements.'''

In Allen v. Wolf River Lumber Co., 169 Wis. 253, 172 N.W. 158, 9 A.L.R. 271 (1919) , the proposal was uncertain as to the amount of goods to be sold, but the buyer made it clear that he understood the amount to be ''1000 cords,'' the seller was bound to that amount when he said nothing to the contrary.

The Restatement (Second) of Contracts § 70 comment a, states: ''But the original offeror may have a duty to speak, for example, if the purported acceptance embodies a plausible but erroneous reading of the original offer.'' This may apply if the reading is erroneous as to what constitutes a reasonable time.

See Church v. Bobbs-Merril Co., 170 F.Supp. 32 (S.D. Ind. 1959) , aff'd, 272 F.2d 212 (7th Cir.) , noted herein under §§ 4.12, 538 and 599.

(n7)Footnote 7. 4 Ill.App.2d 75, 123 N.E.2d 337 (1954) .

(n8)Footnote 8. In George Tomlinson & Son Co. v. Lennon, 46 R.I. 148, 125 A. 266 (1924) , the seller by telegram offered to sell two carloads of flour. The buyer had until the close of business the next day to accept but dispatched an acceptance a day late and the seller booked the order. The buyer argued that there was no contract formed by this exchange. The court, applying notions of estoppel, said, ''The failure of the defendant to telegraph before the end of the next market day would doubtless have justified the plaintiff in refusing to book the two cars of flour, but the plaintiff could, if he saw fit, waive the delay on the part of the defendant... We do not think the defendant can take advantage of his own delay and thus avoid the contract....'' 46 R.I. at 151, 125 A. at 267 .

(n9)Footnote 9. 154 Cal.App.3d 502, 201 Cal.Rptr. 270 (1984) .

(n10)Footnote 10. The quoted language is from Restatement (Second) of Contracts § 39(1).