§ 2.11 Delivery of a Document as the Final Expression of Assent

One of the necessary requirements of a contract under seal is delivery.n1 Generally, delivery consists of a physical handing of the instrument to another person.n2 The purpose of requiring such an act is merely to provide an evidentiary basis for proof of a manifestation of assent.n3 As long as such an instrument is in the possession and power of the obligor, the obligor seldom regards herself or himself as irrevocably bound.n4 Nevertheless, cases are not wanting in which the court has held the instrument to be an operative contract even though the physical possession has not changed.n5 Without purporting to deny the necessity of delivery, the court has merely expanded the use of the word to include a new set of facts. Being convinced that the obligor intended to put the instrument into immediate effect, the words and conduct by which that intention was manifested were called ''delivery.'' Thus justice is done, though definition is made difficult. Conversely, relinquishment of possession to the other party or to an escrow agent is not delivery if there was no intent for the document to become presently operative.n6

The term ''delivery'' is also in use with respect to written contracts not under seal. There is even less reason to assert that it is a necessary requirement. At common law, the sealed instrument was given a special legal operation, beyond that of an ordinary informal contract. Delivery was required, not merely as a manifestation of assent to the terms of agreement, but also as an assent to the document itself as a ''specialty'' with its special operation. All that is necessary to the creation of an informal contract, however, whether reduced to writing or not, is an expression of assent in any form. The writing itself is not necessary,n7 if put in writing, a signature is not necessary. Even if in writing and signed, a delivery is not necessary.n8 It is an expression of assent that is required. Delivery of a writing may be sufficient evidence of such an assent.n9 Words of assent are sufficient, and conduct other than delivery may also be sufficient.n10

For the validity of an informal contract, a writing is necessary only when at least one of the parties has sufficiently expressed an intention not to be bound without one.n11 In such a case, the agreement must be put in writing, and that writing must be presented to this party for an expression of assent.n12 No doubt, this party normally means that the writing shall be signed by both parties, and may mean also that it shall be delivered in some fashion. Whatever requirements of this sort that may have been made in advance, the parties can always enter into a contract by a clear expression of intent to do so without them. Neither party can unilaterally dispense with such requirements laid down by the other party, any more than one can eliminate any of the provisions of the other party's proposal. If the reduction of the agreement to writing is thus made necessary, an assent to the writing as a sufficient one must also be manifested. This manifestation commonly consists of signing and delivery. This accounts for the fact that it has been held in many cases that the writing must be delivered.n13 It may be true that merely reading over the terms of a writing is not a manifestation of assent to them. Even affixing one's signature and continuing to hold possession of the paper may not express assent.n14 Delivery to another person is indeed a common and an expressive act. But assent can be expressed effectively in many ways. Delivery is only one of them. One party may sign and hand the instrument to the other, it being already understood that the other shall retain possession of it.n15 If the other then signs and pockets it, a contract has been made, effective as to both, although the first party made delivery before being bound and the second was bound without making delivery. If there has been expression of assent in no other manner, then there is no written contract without manual delivery.

Just as in the case of contracts under seal and other deeds, delivery of an informal writing may be in escrow and subject to some condition not expressed in the writing itself.n16 Such a conditional delivery as this consummates a contract only in case the other party expresses assent thereto, either in a proposal requesting such a delivery or in accepting the proposal that is made by making such a delivery. If one party prepares a written instrument, signs it, and sends it to another for execution, the latter cannot consummate a contract by signing the paper and then delivering it, either to the offeror or to a third party, with the accompanying statement that it is conditional on an event that is not already specified in the writing. Such a delivery would be a mere counter-offer.n17

In Faber v. Glashagen's Estate, n18 a claim against the estate was based on a written agreement of settlement signed by the decedent. Oral testimony of the claimant as to the decedent's assent was not admissible. However, delivery by the decedent would evidence assent. The court held that possession by the claimant was sufficient prima facie proof of such delivery.

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Contracts LawFormationExecutionContracts LawStatutes of FraudsRequirementsSignaturesContracts LawTypes of ContractsContracts Under Seal

FOOTNOTES:

(n1)Footnote 1. See Restatement (Second) of Contracts § 95(1)(b).

(n2)Footnote 2. The Uniform Commercial Code in § 1-201 provides: '''Delivery'' with respect to instruments, documents of title, chattel paper, or certificated securities means voluntary transfer of possession.'' Note that this provision does not define ''delivery'' as to other kinds of writings.

Delivery to an agent of the other party completes delivery. Thus, delivery of sham notes to a director of a savings and loan was delivery to the savings and loan. Bryan v. Bartlett, 435 F.2d 28 (8th Cir.1970) , cert. denied, 402 U.S. 915 .

(n3)Footnote 3. In West India Indus., Inc. v. Tradex, 664 F.2d 946 (5th Cir.1981) , the delivery of a bill of lading by the carrier unequivocally manifested the assent of the carrier to its terms, even when these terms were less favorable to the carrier than the terms of a prior contract.

(n4)Footnote 4. Parties may themselves refer to ''delivery,'' without using that term with its legal connotations. In Jones v. Young, 539 S.W.2d 901 (Tex.Civ.App.1976) , a deed conveying a gift of land was handed to the grantee, the grantor saying, that ''this is attended to, this is the end of it.'' When the parties were advised to have it recorded, the grantor stated, ''No, I don't want it known at this time, don't want to put it on the record.'' The scrivener then wrote on the top margin, ''To be delivered on death of the Grantor.'' The grantor signed her name directly below this legend. The trial judge made a finding of fact that the deed had been delivered. In affirming, the appellate court stated, ''Under the circumstances the trial judge might reasonably conclude that in signing the notation on the deed Mrs. Black did not choose or use the word deliver as a word of art, or as it might be used in the law of conveyancing, but merely intended that the deed not be tendered for recordation during her lifetime.''

(n5)Footnote 5.

Ill. - Maciaszek v. Maciaszek, 21 Ill.2d 542, 173 N.E.2d 476 (1961) .

Mich. - McMahon v. Dorsey, 353 Mich. 623, 91 N.W.2d 893 (1958) .

Md. - Twining v. National Mtg. Corp., 268 Md. 549, 302 A.2d 604 (1973) , a case in which the court relied heavily on § 244 of this treatise where the subject is discussed in greater depth.

Eng. - Roberts v. Security Co., 1 Q.B. 111 (1897) .

This section is quoted in Simmons & Simmons Constr. Co. v. Rea, 155 Tex. 353, 286 S.W.2d 415 (1956) , a case that is noted herein under § 2.10.

Throwing the contract on the table can be shown to have been intended as a delivery. It is a question of fact. Brown v. Grow, 249 Mass. 495, 144 N.E. 403 (1924) .

See Chapter 10, Contracts Under Seal, § 244.

(n6)Footnote 6. Moore v. Trott, 162 Cal. 268, 122 P. 462 (1912) . See Restatement (Second) of Contracts § 101, 103, 284(2); Gavitt, The Conditional Delivery of Deeds, 30 Colum.L.Rev. 1145 (1930); Corbin, Delivery of Written Contracts, 36 Yale L.J. 443 (1926); Patterson, The Delivery of a Life Insurance Policy, 33 Harv.L.Rev. 198 (1919). See also § 244, 247-251 below.

(n7)Footnote 7. A signed writing is required by statute in certain cases; but we are not now dealing with the statute of frauds. Even that statute makes no requirement of a delivery; informal and undelivered memoranda, signed by the party to be charged, are sufficient.

(n8)Footnote 8.

U.S. - Armour & Co. v. Celic, 294 F.2d 432, 435 (2d Cir.1961) . The court stated, ''In the absence of some requirement in the contract itself, we know of no principle of law which makes the validity of a contract contingent upon its delivery or the delivery of a copy to one or more parties to it.'' In re Roman Crest Fruit, Inc., 35 B.R. 939 (Bkrtcy.S.D.N.Y.1983) thoroughly explores the New York cases regarding this point.

Ill. - Rothbaum v. Levy, 195 Ill.App. 246 (1915) ; Leviton Lumber Co. v. Levy, 195 Ill.App. 248 (1915) .

(n9)Footnote 9. Even though physical possession has changed, it may be shown by other evidence that there was no intention to consummate a contract. Bray v. Comer Mercantile Co., 32 Ga.App. 746, 124 S.E. 817 (1924) ; Rupert Nat. Bank v. Insurance Co. of North America, 40 Idaho 530, 234 P. 465 (1925) ; Gund v. Roulier, 108 Neb. 589, 188 N.W. 185 (1922) , rev'd, 108 Neb. 595, 190 N.W. 220 .

(n10)Footnote 10. See Dean v. Sargent, 234 Iowa 176, 12 N.W.2d 249 (1944) .

In Hutchinson v. Fish Engineering Corp., 42 Del.Ch. 21, 203 A.2d 53 (1964) , aff'd, 42 Del.Ch. 435, 213 A.2d 447 , the court stated that Texas law usually requires delivery of a contract, but that under the circumstances of the case, which are not clearly set forth, the parties contemplated that the contract would be effective without delivery of a copy to each party.

In Fujimoto v. Rio Grande Pickle Co., 414 F.2d 648 (5th Cir.1969) , two key employees were offered an attractive profit-sharing arrangement. One of them asked that the promises be put in writing. The employer prepared a writing that was to their satisfaction and sent it to them. They signed the writings but did not return a signed copy. Their continuing to work was an overt act manifesting their assent to the terms of the writing. The court relied heavily on § 3.13 of this treatise. See also Osguthorpe v. Anschutz Land & Livestock Co., 456 F.2d 996, 1000 (10th Cir.1972) .

(n11)Footnote 11. The court inferred a manifestation of intention not to be bound until delivery from the conduct of the parties in Schwartz v. Greenberg, 304 N.Y. 250, 107 N.E.2d 65 (1952) .

(n12)Footnote 12. Conversely where a writing states that it becomes binding on ''due execution of all parties,'' delivery is not a condition precedent to the binding effect of the contract. Bohlen Industries of North America, Inc. v. Flint Oil & Gas, Inc., 106 A.D.2d 909, 483 N.Y.S.2d 529 (1984) .

(n13)Footnote 13.

Ky. - Murrell v. American Ry. Exp. Co., 207 Ky. 322, 269 S.W. 293 (1925) .

Vt. - Fitzgerald v. Metropolitan Life Ins. Co., 90 Vt. 291, 98 A. 498 (1916) , in absence of proof of mutual intention otherwise.

(n14)Footnote 14.

Ga. - W.T. Rawleigh Co. v. Royal, 30 Ga.App. 706, 119 S.E. 339 (1923) .

This section is cited in Yee v. Okamoto, 45 Hawaii 445, 370 P.2d 463, 466 (1962) . A lessor signed a written cancellation and surrender of a lease, but retained possession and later cut out her signature. The court held that the fact of signature was not in itself sufficient evidence of execution of the surrender. Manual delivery is not necessary; but there must be evidence of intention other than mere signature. See also § 244.

(n15)Footnote 15. See Hutton v. Watling, [1948] 1 All Eng. 803 (C.A.), where the terms of agreement were prepared, signed, and stamped by the vendor of a business and delivered to the purchaser who retained it and made payments under it. Here the contract was held consummated because the purchaser understood the document to be a fully integrated offer and accepted it as such, as the vendor had reason to know. The vendor was bound in spite of efforts to show that the document was intended to be only a preliminary memorandum.

Norton & Lamphere Constr. Co. v. Blow & Cote, Inc., 123 Vt. 130, 183 A.2d 230 (1962) .

(n16)Footnote 16.

Iowa - Herron v. Brinton, 188 Iowa 60, 175 N.W. 831 (1920) .

Mass. - Diebold Safe & Lock Co. v. Morse, 226 Mass. 342, 115 N.E. 431 (1917) .

N.Y. - Savage Realty Co. v. Lust, 203 App.Div. 55, 196 N.Y.S. 296 (1922) .

Or. - Kinney v. Schlussel, 116 Or. 376, 239 P. 818 (1925) .

Tex. - Morris v. Logan, 273 S.W. 1019 (Tex.Civ.App.1925) ; Kugle v. Traders' State Bank, 252 S.W. 208 (Tex.Civ.App.1923) , condition that a third party should sign.

Utah - Parker v. Weber County Irr. Dist., 65 Utah 354, 236 P. 1105 (1925) .

(n17)Footnote 17. In Farago v. Burke, 262 N.Y. 229, 186 N.E. 683 (1933) , a vendor signed a contract for sale of land and handed it to the plaintiff. The latter asked for time to submit it to his attorney. Later, the plaintiff handed it back to the vendor's attorney, saying, ''I am handing this contract to you in escrow ... we will exchange contracts on Tuesday.'' Before Tuesday, the vendor revoked. The court said: ''The plaintiff, no doubt in perfect good faith, desired to hold the defendant, while he would be free to do as he pleased, in the few following days. Such facts do not make contracts. Had F. accepted the contract signed by M., thus evidencing a completed agreement, or tendered his signed copy, or in any other effectual way signified his acceptance and consent, before the withdrawal of the offer by M., the latter would have been obligated to sell on the terms and conditions stated in the paper signed by him.''

(n18)Footnote 18. 338 Mich. 240, 61 N.W.2d 34 (1953) .