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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 § 3.5

§ 3.5 Knowledge of Offer as a Pre-requisite to Acceptance

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Probably most contracts are bilateral in character-a promise is exchanged for a return promise. Unless one party offers an exchange and requests another party to make the return promise, no return promise is likely to be made. As a practical matter, communication of the offer is necessary. In rare cases, however, a person may negligently express assent to an offer without knowledge of its existence or its content. In such a case, the negligent individual will be held to the appearance of assent that has been created.n1

In unilateral contracts also, if the offeror makes a promise for a performance to be rendered by a specific person, it is very seldom that the performance will be rendered by that person unless the promise of compensation and request for action is communicated to that person.n2 Here, too, as a practical matter, communication of the offer is necessary.

But there is one class of unilateral contracts about which this cannot be said. There are many offers of reward published or broadcast for the rendition of a service by any person who may be fortunate enough to be able to do it. Thus, rewards are publicly offered for the discovery and return of lost articles, for the invention of new devices, for the capture and conviction of some person charged with crime. In these cases, it may happen that someone is engaged in rendering the exact performance requested, either before the offer is published or before having heard of it. Sometimes, the person has completed the performance in entire ignorance of the offer. It has been held in a number of cases that the offeror's promise of compensation is not enforceable by one who has done this.n3 There is no power of acceptance by one to whom the offer is wholly unknown.

This is quite logical and is consistent with the assumption that ''contract'' requires conscious assent to terms proposed by another. It is probable, indeed, that the chief reason for enforcing a promise is that it has induced the promisee to act in reliance upon it. One who has rendered a service without knowledge of an offered promise has not so acted. But the chief reason is not necessarily the only reason for enforcing a promise. If it seems good to the courts to enforce a promise when the promisor has received the desired equivalent, even though the one rendering it knew nothing of the promise and rendered the service from other motives, there is no sufficient reason for refusing to call that enforceable promise a contract.

There are cases in which the courts have taken this latter view and have enforced the promise, even though the person rendering the required service did so in ignorance of the promise.n4 Most, but not all, of these have been cases in which the promise was made by some public corporation such as a state or a city. They have been explained on the theory that the published promise of reward was a public grant and not within the field of contract.n5 But whether it is within this field depends solely upon the way in which we choose to delimit the field. Whether the promise of reward is public or private, it may equally well be called a ''grant''. In either case the result is that we have an enforceable promise. The recovery is the amount or value of the performance promised, not the value of the performance rendered by the plaintiff and received by the defendant. The remedy is the customary contract remedy.

Moreover, to call the offer of a state or municipality a ''grant,'' by statute or ordinance, is to describe it in a way that is different from that in which it is commonly regarded.n6 Often, the offer of reward is made by the proclamation of some public officer and not by an act of legislation. But whether made in one way or the other, it is generally regarded and recognized for what it is-a promise to pay for service, made as many other public contracts are made, and made in the same way that private persons and associations make their contracts.

One court has thought that where two offers, identical in terms, cross in the mail-as where A writes B offering to sell Blackacre for $5,000, and at the same time B writes A offering to pay $5,000 for Blackacre-there is no contract.n7 There are very few examples of identical offers that have crossed in the mails, and the question must be regarded as still unsettled.n8 A legal system that accepts the notion that a contract involves the concurrence of the intentions of the parties has no problem accepting that identical cross offers create a contract.n9 The common law generally has taken an objective approach to the effect that a contract involves an objective manifestation of mutual assent rather than a concurrence of intentions. This approach is for the convenience of courts and parties, making unnecessary a searching inquisition into actual intention. Where objective evidence of an actual concurrence of intentions is available, justice is well served by giving effect to those intentions. Identical cross offers provide such objective evidence.n10 It may be that a little confusion would ensue if crossed offers were to be held to make a contract. In any case, it is certain that if such cross offers do not create a contract each such offer creates a power of acceptance in the other party and that an acceptance by either one closes the deal and makes the contract that each of them offered to make.n11

Legal Topics:

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

Contracts LawFormationOffersGeneral OverviewContracts LawTypes of ContractsUnilateral ContractsRewardsContracts LawFormationAcceptanceMethods of AcceptanceGeneral OverviewContracts LawTypes of ContractsUnilateral ContractsGeneral Overview

FOOTNOTES:

(n1)Footnote 1. Restatement (Contracts) § 23 comment b.

(n2)Footnote 2. In employment situations, publication of promised terms of employment may occur in circumstances where not all eligible employees will be aware of the promises. See § 4.2 below. For the present, see Schlosser v. Allis-Chalmers Corp., 86 Wis.2d 226, 271 N.W.2d 879, 885 (1978) . ''The company's admission that it distributed literature to its employees describing the plan is enough to permit an inference that the employees worked with general knowledge of the offer.''

(n3)Footnote 3.

Ala. - Gadsden Times v. Doe, 345 So.2d 1361, 86 A.L.R.3d 1136 (Ala.Civ.App.1977) . A curious case. The newspaper printed a news item to the effect that ''Mayor Les Gilliland announced today a total of $5,000 is offered for information leading to the conviction of the slayers of the Reverend Edward Pace.'' Other similar news articles concerning rewards in the case preceded this item. The news was apparently totally inaccurate. No one in city government knew of a reward offer. It was held that the newspaper made no offer by printing these news items. Clearly, it did not claim to be an offeror. However, shouldn't the newspaper have tort liability if it manufactured news concerning the alleged offer? The court was willing to consider the contractual liability of the newspaper based on a later article that appeared after the information had been supplied by the plaintiff.

Ark. - Arkansas Bankers' Ass'n v. Ligon, 174 Ark. 234, 295 S.W. 4, 53 A.L.R. 534 (1927) .

Cal. - Hewitt v. Anderson, 56 Cal. 476 (1880) .

D.C. - Glover v. Jewish War Veterans, 68 A.2d 233 (Mun.Ct.D.C.1949) .

Fla. - Sumerel v. Pinder, 83 So.2d 692 (Fla.1955) , a reward was offered for information leading to an arrest and conviction. Before the offer was made, the plaintiff had already given the information to the proper authorities.

Ill. - Williams v. West Chicago St. R. Co., 191 Ill. 610, 61 N.E. 456 (1901) ; Board of Trustees of Police Pension Fund v. Railway Ticket Protective Bureau, 175 Ill.App. 464 (1912) ; Chicago & A.R. Co. v. Sebring, 16 Ill.App. 181 (1885) .

Kan. -In Alexander v. Russo, 1 Kan.App.2d 546, 571 P.2d 350 (1977) , some platinum had been stolen. The thief's mother could not recover the reward as she did not know of the offer at the time she made a statement to the police. Her attorney could not recover despite the fact he knew of the offer at the time he reported information to the police supplied by her and told her to make a complete statement to the police. An attorney must not use a confidence of his or her client for self-advantage unless the client consents after full disclosure.

Miss. - Fidelity & Deposit Co. of Maryland v. Messer, 112 Miss. 267, 72 So. 1004 (1916) .

Mo. - Smith v. Vernon County, 188 Mo. 501, 87 S.W. 949 (1905) .

N.J. - Mayor, etc., of City of Hoboken v. Bailey, 36 N.J.L. 490 (1873) .

N.Y. - Howland v. Lounds, 51 N.Y. 604 (1873) ; Fitch v. Snedaker, 38 N.Y. 248 (1868) ; Sheldon v. George, 132 App.Div. 470, 116 N.Y.S. 969 (1909) ; Vitty v. Eley, 51 App.Div. 44, 64 N.Y.S. 397 (1900) . See also Braun v. Northeast Stations & Services, Inc., 93 A.D.2d 994, 461 N.Y.S.2d 623 (1983) .

N.D. - Couch v. State, 14 N.D. 361, 103 N.W. 942 (1905) .

Tenn. - Stamper v. Temple, 25 Tenn. 113 (1845).

Tex. - Broadnax v. Ledbetter, 100 Tex. 375, 99 S.W. 1111 (1907) .

Restatement, Contracts, §§ 23, 53; Restatement (Second) of Contracts § 23, comment c; § 51, comment a.

This rule is supported by inference in Marvin v. Treat, 37 Conn. 96 (1870) . In that case, A offered a reward of $50 to anyone who should recover the horse and wagon stolen from him. B, in ignorance of the offer, recovered the horse and wagon and turned it over to A and accepted $2 for his services. It was held, in an action by B to recover the amount of the reward, that if he ever had a cause of action it was satisfied by his acceptance of the $2. This indicates that his right to $50 was at least doubtful.

This section is cited in State v. Malm, 143 Conn. 462, 123 A.2d 276 (1956) , where the State published an offer of a reward for information leading to the arrest and conviction of the person guilty of a particular crime. Prior to this publication, the claimant had given to the police all the information in her possession and the guilty party had been arrested. Later, he confessed and was convicted. The court held that the claimant was not entitled to the reward.

(n4)Footnote 4.

U.S. - Drummond v. U.S., 35 Ct.Cl. 356 (1900) .

Del. - Eagle v. Smith, 4 Houst. 293 (1871) .

Ind. - Sullivan v. Phillips, 178 Ind. 164, 98 N.E. 868 (1912) ; Everman v. Hyman, 26 Ind.App. 165, 28 N.E. 1022 (1891) ; Dawkins v. Sappington, 26 Ind. 199 (1866) .

Kan. - Stone v. Dysert, 20 Kan. 123 (1878) .

Ky. - Coffey v. Com., 37 S.W. 575 (1896); Auditor v. Ballard, 72 Ky. (9 Bush) 572 (1873) .

Nev. - Smith v. State, 38 Nev. 477, 151 P. 512 (1915) .

Pa. - Cummings v. Gann, 52 Pa. 484 (1866) .

Tex. - Choice v. City of Dallas, 210 S.W. 753 (Tex.Civ.App.1919) .

Vt. - Russell v. Stewart, 44 Vt. 170 (1872) .

Eng. -Gibbons v. Proctor, 64 L.T. 594 (1892); Neville v. Kelly, 12 C.B. (N.S.) 740 (1862).

See 26 Yale L.J. 169, 182; 29 Harv.L.R. 221; 1 Cornell L.Q. 92.

In Stone v. Dysert, supra , the plaintiff knew that a reward had been offered, but did not know its exact terms or who had made the offer. There seems little reason for refusing enforcement in such a case, even though in rendering the service the plaintiff cannot be said to have assented to the exact offer.

Ashley, Contracts, p. 13, says: ''An offer uncommunicated is inconceivable.'' For cases where it was in fact conceived, see supra.

''A person who by public notice announces a reward for the performance of an act, e.g., for the production of a result, is bound to pay the reward to any person who has performed the act, even if he did not act with a view to the reward.'' German Civil Code, Art. 657. This provision is discussed in 1 Formation of Contracts: A Study of the Common Core of Legal Systems 101-102 (Rudolph B. Schlesinger Ed.1968). See in accord (1919) 36 S.African L.J. 29.

(n5)Footnote 5. In Choice v. City of Dallas, supra , in part quoting from Broadnax v. Ledbetter, 100 Tex. 375, 99 S.W. 1111 (1907) , the court says: ''While we have seen no such distinction suggested, it may well be supposed that a person might become legally entitled to a reward for arresting a criminal, although he knew nothing of its having been offered, where it was offered in accordance with law by the government. A legal right might in such a case be given by law without the aid of contract. A suggestion of such a distinction was also made in the cases of Clinton County v. Davis, 162 Ind. 60, 69 N.E. 680 , and Drummond v. United States, 35 Ct. Cl. 356 . The only case we have found in which the distinction was actually applied is that of Smith v. State, 38 Nev. 477, 151 P. 512, L.R.A.1916A1276.''

(n6)Footnote 6. In contrast to the tenor of the text, it has been suggested that reward offers could be separated from the concepts of offer and acceptance and enforced regardless of whether the party performing the service was aware of the offer. John Murray, Contracts 129 (3d ed. 1990).

(n7)Footnote 7. Brett, J., in Tinn v. Hoffmann & Co., 29 L.T. (N.S.) 271 (1873). With him agreed Blackburn, Keating, Archibald and Grove, JJ.

Contra were Honyman and Bramwell, JJ.

Honyman, J., said: ''I cannot see why the fact of the letters crossing each other should prevent their making a good contract. If I say I am willing to buy a man's house on certain terms, and he at the same moment says that he is willing to sell it, and these two letters are posted so that they are irrevocable with respect to the writers, why should not that constitute a good contract? The parties are ad idem at one and the same moment.''

James v. Marion Fruit Jar Co., 69 Mo.App. 207, 219 (1897) , is in accord with Brett, J., that there is no contract.

(n8)Footnote 8. Morris Asinof & Sons v. Freudenthal, 195 App.Div. 79, 186 N.Y.S. 383 (1921) , aff'd, 233 N.Y. 564, 135 N.E. 919 , appears to be a case in which it was held that identical offers crossing in the mails made a binding bargain for the sale of goods, without the necessity of a reply to either offer. On the facts as reported the decision should be approved. It was in fact affirmed without opinion, by the Court of Appeals. The parties seem to have agreed on terms through a broker, although possibly not so as to be bound by contract. They had written notes of confirmation that agreed on all matters except the time for payment, which was to be either before January 1 or before January 5. In two subsequent letters that crossed in the mails, they agreed on the later date. After receiving this letter from the seller, the buyer repudiated the deal on the ground that his own letter was not acknowledged and assent expressed.

(n9)Footnote 9. Spiers v. Seal, 426 So.2d 631 (La.App.1982) , writ denied, 432 So.2d 269 (La.) .

(n10)Footnote 10. The Restatement (Second) of Contracts § 23 comment d., ill. 5, hedges by suggesting that two parties could assent in advance to cross offers and suggests that such assent may be inferred when both parties think a contract has been made.

(n11)Footnote 11. In Tinn v. Hoffmann & Co., supra , Blackburn, J., said: ''Either of the parties may write and say, 'I accept your offer, and, as you perceive, I have already made a similar offer to you,' and then people would know what they were about; I think either side might revoke.''