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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 § 3.31

§ 3.31 Subsequent Erroneous Interpretation Does Not Make an Acceptance Conditional

An exact and unconditional acceptance of an offer is not afterwards turned into a conditional acceptance so as to invalidate the contract by an improper interpretation of the terms of this contract by one of the parties or by one party's attempt to alter the terms of the contract in some respect.n1 Thus, where a building contractor had properly accepted the bid of a sub-contractor for the plumbing work, the fact that the contractor immediately thereafter asserted incorrectly that the sub-contractor must pay a proportionate part of the cost of the builder's surety bond, did not invalidate the contract or prevent the building contractor from maintaining an action for damages for the sub-contractor's subsequent repudiation.n2 Also, where a general contractor accepts a proposal from an electrical subcontractor, their subsequent disagreement as to the meaning of the specifications does not invalidate the contract.n3 Similarly, the State of Georgia requested bids for the supply of gasoline. Plaintiff submitted its bid specifically indicating that it was contingent on the State's agreement to buy all its regular grade gasoline from it. The State ''accepted'' the bid by giving the plaintiff a written contract agreeing to buy gasoline on a non-exclusive basis. Several months later, plaintiff sought assurances from the State that plaintiff had the exclusive right to furnish regular grade gasoline. A State employee, who had no authority to bind the State, gave such assurances. When the State bought gasoline from other suppliers, plaintiff brought suit. It was held that summary judgment should be entered for the State.n4 The State had counter-offered and the plaintiff by conduct had accepted the counter-offer. The plaintiff's erroneous interpretation, shared by a low-level State employee, did not prevent the formation of the contract and did not control the meaning of the contract.

An attempt to vary the terms of a contract may be made in such a way as to be reasonably understood as a repudiation and to be in itself an actionable breach. Even so, it does not invalidate the contract made, although it may justify the other party in refusing performance.

Legal Topics:

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

Contracts LawBreachAnticipatory RepudiationGeneral OverviewContracts LawFormationAcceptanceGeneral Overview

FOOTNOTES:

(n1)Footnote 1. In re Estate of McManus, 83 A.D.2d 553, 440 N.Y.S.2d 954 (1981) , aff'd, 55 N.Y.2d 855, 447 N.Y.S.2d 708, 432 N.E.2d 601 .

(n2)Footnote 2. In Frederick Raff Co. v. Murphy, 110 Conn. 234, 147 A. 709 (1929) , the court said: ''The contract relationship had already been created; and if the plaintiff had no right to make this deduction, as upon this record we must assume it did not, the effect would be merely that it attempted an alteration in the terms of the contract, ineffective, because not assented to by the defendants, and the defendants could have proceeded with the work and claimed the full price agreed upon.''

This section is quoted in Killam v. Tenney, 229 Or. 134, 366 P.2d 739, 750 (1961) , holding that after giving a valid notice of acceptance by an option holder, a subsequent letter in which he misinterpreted the contract would not invalidate that contract. See also §§ 3.30, 264.

(n3)Footnote 3. B & C Electric, Inc. v. Pullman Bank & Trust Co., 96 Ill.App.3d 321, 51 Ill.Dec. 698, 421 N.E.2d 206 (1981) .

(n4)Footnote 4. State v. U.S. Oil Co., 194 Ga.App. 1, 389 S.E.2d 498 (1989) , rehearing (1989) and cert. denied (1990).