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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 § 3.27

§ 3.27 Acceptance by Telegraph-When Operative

In the United States, the telegraph is not part of the postal system; instead, the service is rendered by public utilities. From the 1840's to relatively recent times communication by telegraph was the medium of choice for an enormous number of messages where speed was important to the sender. It still remains so for a limited number of messages. Radiograms from ships at sea are particularly important. In other circumstances, the telegraph has largely been displaced first by the telephone, then the telex and most recently by the facsimile or fax. There has been such general confidence in its reliability that often the telegraph has been used instead of the mail as a means of making and accepting offers. These facts have caused the rules applicable to acceptance by telegraph to be very similar to those applicable to acceptance by post.

The offeror can, by proper expression of will, either totally exclude the telegraph or make its use an absolute requirement, or instead make it one of several alternative methods. The offer can provide that a telegraphed acceptance shall be operative only on receipt by the offeror.n1 But the offer may do none of these things; and yet the telegraph may in fact be used by the offeree.

If the offeror expressly or by reasonable implication authorizes the use of the telegraph to accept, a properly started and directed telegram of acceptance is operative on putting the message in the hands of the telegraph company. Just as a letter must be stamped, so must the telegraphic charges be paid or credit agreed on by the company. The fact that the telegram might possibly be recalled or delayed or lost does not prevent its operation as an acceptance.n2

If the offer is itself by telegraph this is a fact that tends toward an inference that the same method of communication is reasonable in accepting by telegraph and in supposing that starting the telegram makes the contract.n3

If the court finds that the offeree is thus reasonable and that the offeror had reason to expect as much, the acceptance is operative at starting.n4 Such a finding by the court, however, is not a necessary result of the fact that the offer was by telegram. All other surrounding circumstances should be considered. If the offeree knows facts indicating that the accepting telegram will be delayed, it may be quite unreasonable to adopt this method, or at least to act on the assumption that the contract can be closed by leaving the message at the telegraph office.

If the offer is not by telegraph and the offeror says nothing as to the mode of acceptance, acceptance by telegraph may nevertheless be a proper mode. If all the other requirements of an acceptance are fulfilled, acceptance by telegraph will be operative at least as soon as the telegram is received.n5 It is quite possible, indeed, that the telegraphic acceptance will be operative on starting. The method may be entirely reasonable, in accord with business usage of the time and place, and one that the offeror had reason to expect, so that acceptance should be effective on starting the telegram.n6 In some cases, however, it has been held that the acceptance is not operative until the telegram is received.n7 It is true that in such a case there is little reason for saying that the telegraph is the common agent of both parties or that the offeror has authorized its use and has agreed to carry the risk of delay or nondelivery. Since these arguments are not conclusive in cases of acceptance by post, they need not be regarded as conclusive in cases of acceptance by telegraph. In at least one case, it has been held that an acceptance by mail may be operative on mailing even though the offer was by telegraph.n8 So also, where an offer is hand delivered to a real estate broker to purchase realty, containing signature lines for acceptance, a telegraphic acceptance was reasonable where the owners of the property were at their residence some 2,000 miles away and were notified of the offer by a telephone call from the broker.n9

Without doubt, it would much more often be reasonable to accept by telegraph an offer that came by mailn10 than to accept by mail an offer that came by telegraph.n11 The use of the telegraph by an offeror is some indication that speed of communication is desired.

If the transaction is governed by the United Nations Convention on Contracts for the International Sale of Goods, Article 18(2) of the convention provides that the acceptance takes place on receipt.n12

Legal Topics:

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

Contracts LawFormationAcceptanceMethods of AcceptanceGeneral OverviewContracts LawFormationAcceptanceGeneral Overview

FOOTNOTES:

(n1)Footnote 1.

Ky. - Postal Tel. Cable Co. v. Louisville Cotton Seed Oil Co., 140 Ky. 506, 131 S.W. 277 (1910) .

Mass. - Lewis v. Browning, 130 Mass. 173 (1881) .

Eng. - Byrne v. Van Tienhoven, L.R. 5 C.P.D. 344 (1880) , ''subject to your cable on or before the 15th here.''

It was held in Postal Tel. Co. v. Willis, 93 Miss. 540, 47 So. 380 (1908) , that a telegram of acceptance was operative on its delivery to the company for transmission in spite of a custom among cotton dealers to regard it as operative only on receipt by the offeror. Since any contractor can make the ordinary rule inapplicable by notice in advance to the other party, it is difficult to see why the persons engaged in a trade can not make it inapplicable by a general trade custom and understanding. The Uniform Commercial Code is distinctly to the contrary. See U.C.C. §§ 1-205, 2-202.

(n2)Footnote 2.

U.S. - Stephen M. Weld & Co. v. Victory Mfg. Co., 205 Fed. 770, (E.D.N.C.1913) , rejecting telegram received after starting telegram of acceptance.

Conn. - L. & E. Wertheimer, Inc. v. Wehle-Hartford Co., 126 Conn. 30, 9 A.2d 279, 125 A.L.R. 985 (1939) .

Ill. - Paramount Pictures Distributing Corp. v. Gehring, 283 Ill.App. 581 (1936) .

Mass. - Brauer v. Shaw, 168 Mass. 198, 46 N.E. 617 (1897) .

N.Y. - Trevor v. Wood, 36 N.Y. 307 (1867) ; Chesebrough v. Western Union Tel. Co., 76 Misc. 516, 135 N.Y.S. 583 (1913) , aff'd, 157 App.Div. 914, 142 N.Y.S. 1112 .

Okl. - Western Union Tel. Co. v. Wheeler, 114 Okl. 161, 245 P. 39, 47 A.L.R. 156 (1926) .

Tex. - Kennedy Mercantile Co. v. Western Union Tel. Co., 167 S.W. 1094 (Tex.Civ.App.1914) .

W.Va. - E.T. Barnum Iron Works v. Prescott Construction Co., 86 W.Va. 173, 102 S.E. 860 (1920) .

Cf. Lucas v. Western Union Tel. Co., 131 Iowa 669, 109 N.W. 191 (1906) .

(n3)Footnote 3.

U.S. - Minnesota Linseed Oil Co. v. Collier White Lead Co., 17 Fed.Cas. 447, 4 Dill. 431 (C.C.Minn.1876) .

Conn. - L. & E. Wertheimer, Inc. v. Wehle-Hartford Co., 126 Conn. 30, 9 A.2d 279, 125 A.L.R. 985 (1939) .

Ill. - Haas v. Myers, 111 Ill. 421 (1884) .

Ky. - C.W. Craig & Co. v. Thomas S. Jones & Co., 200 Ky. 113, 252 S.W. 574 (1923) .

Mass. - Brauer v. Shaw, 168 Mass. 198, 46 N.E. 617 (1897) , disregarding M'Culloch v. Eagle Ins. Co., 18 Mass. 278, 1 Pick. 278 (1822) .

Or. - Williams v. A.C. Burdick & Co., 63 Or. 41, 125 P. 844 , adhered to, 63 Ore. 41, 126 P. 603 (1912) .

Pa. - Follansbee Metals Co. v. John T. Clark & Son, Inc., 387 F.Supp. 574, 581 (W.D.Pa.1974) . Clark moved to quash service or alternatively to transfer to another district on grounds of insufficient contacts. Held, motions denied, as Clark entered into a contract within the jurisdiction by sending a telegram of acceptance.

Tex. - Western Union Tel. Co. v. Fletcher, 208 S.W. 748 (Tex.Civ.App.1919) .

Whether the use of the telegraph is impliedly authorized is a question of fact. Perry v. Mount Hope Iron Co., 15 R.I. 380, 5 A. 632 (1886) .

(n4)Footnote 4. While no court decision on the point has been seen, it is believed that the rule above stated is not made inapplicable by the mere fact that the offeree does not use the same telegraph company as did the offeror.

(n5)Footnote 5.

W.Va. - Caldwell v. Cline, 109 W.Va. 553, 156 S.E. 55, 72 A.L.R. 1211 (1930) .

In Perry v. Mount Hope Iron Co., supra , the court said, ''if it be shown that the acceptance duly reached the defendant, the question of the mode, no mode having been specified, is immaterial.'' The telegraphic acceptance was in this case received by the offeror, but the court held that the contract was made at the place of starting the telegram. The statute of frauds of the place of receipt was held not to be applicable.

(n6)Footnote 6.

U.S. - Stephen M. Weld & Co. v. Victory Mfg. Co., 205 Fed. 770 (E.D.N.C.1913) .

R.I. - Perry v. Mount Hope Iron Co., 15 R.I. 380, 5 A. 632 (1886) , offer made orally.

Since it is custom that has made acceptance by telegram operative at starting, it would seem that there would be no objection to a contrary custom in a particular trade. But proof of such a custom was not allowed in Postal Tel. Co. v. Willis, 93 Miss. 540, 47 So. 380 (1908) . The result would be different today under the provisions of Uniform Commercial Code §§ 1-205 and 2-202.

(n7)Footnote 7.

U.S. - Shurter v. Ricker, 62 F.2d 489 (5th Cir.1932) , cert. denied, 289 U.S. 732 .

Iowa - Lucas v. Western Union Tel. Co., 131 Iowa 669, 109 N.W. 191 (1906) .

It should be noted that in Shurter v. Ricker, supra , the offer was made by a married woman residing in New York where she had full power to make contracts. The telegraphic acceptance was from Texas, where married women were still under disability. The court did not wish to hold that the telegram was operative at starting for the reason that the New York woman could then profit by the Texas law. Such an unjust result could be avoided by holding that the telegraphic acceptance was not operative until received.

In Dickey v. Hurd, 33 F.2d 415 (1st Cir.1929) , cert. denied, 280 U.S. 601 , an offer was sent from Massachusetts by mail, and the offeree accepted by telegram from Georgia. The court said: ''Where parties are at a distance from one another, and an offer is sent by mail, it is universally held in this country that the reply accepting the offer may be sent through the same medium, and, if it is so sent, the contract will be complete when the acceptance is mailed, properly addressed to the party making the offer and beyond the acceptor's control; the theory being that, when one makes an offer through the mail he authorizes the acceptance to be made through the same medium, and constitutes that medium his agent to receive his acceptance... But in this case, although the offer was by mail, the acceptance was by telegraph, and, not being sent through the same medium, it cannot be said that Mr. Hurd authorized an acceptance by telegraph and constituted that medium his agent to receive the acceptance. In this situation the acceptance, when delivered at the telegraph office, was neither actually nor constructively communicated to Mr. Hurd, and the contract was not consummated, until the telegram was delivered to Mr. Hurd in Massachusetts.''

(n8)Footnote 8.

Okl. - Farmers' Produce Co. v. McAlester Storage & Com. Co., 48 Okl. 488, 150 P. 483 (1915) .

In Ferguson v. West Coast Shingle Co., 96 Ark. 27, 130 S.W. 527 (1910) , a revocation received before the letter of acceptance was received was held to be in time to prevent a contract.

(n9)Footnote 9. Pickett v. Miller, 76 N.M. 105, 412 P.2d 400 (1966) .

(n10)Footnote 10. Stephen M. Weld & Co. v. Victory Mfg. Co., 205 Fed. 770 (E.D.N.C.1913) .

(n11)Footnote 11. In Farmers' Produce Co. v. McAlester Storage & Comm'n Co., 48 Okl. 488, 150 P. 483 (1915) , it was held that an acceptance of a telegraphed offer by post was reasonable. To the contrary is Richard v. Credit Suisse, 124 Misc. 3, 7, 206 N.Y.S. 150 (1924) , aff'd, 214 App.Div. 705, 209 N.Y.S. 909 , aff'd, 242 N.Y. 346, 152 N.E. 110 , where the court says that such an acceptance was not authorized, but then threw further light on this conclusion, stating that under the circumstance, ''the greatest possible speed was demanded.''

(n12)Footnote 12. This Article is discussed in § 3.24 of this chapter.