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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 § 3.23

§ 3.23 Alternative Modes of Acceptance

As already indicated,n1 an offeror can limit the power of acceptance very narrowly. The offer can prescribe by its very terms one specific mode of acceptance. But instead of being thus limited, the offer may prescribe no mode of acceptance whatever. There must be enough to indicate that the offeror intends to create a power of acceptance, but this is quite possible in the absence of any suggestion whatever as to the mode of acceptance.n2 In this case the offeree can accept in any manner that is reasonable under the circumstances.n3 Offers of this kind have previously been described as ''indifferent offers''.

An even larger power of acceptance may be created by the offeror. The offer may suggest and authorize an acceptance in one or more particular modes, without making them exclusive. In such case, compliance with the suggested mode will close the contract, however unreasonable or unusual the mode may be, but so also will compliance with any other reasonable mode. In this case, the offeree has all the power that would have been created if the mode of acceptance had been exactly prescribed, and all the power that would exist if no mode of acceptance had been mentioned at all. Such offers can also properly be described as ''indifferent''.

It is not always easy to determine what mode of acceptance the offeror has required or suggested; a reasonable construction must be put upon the offeror's words or other conduct. The canon of construction placed upon such offers by legislationn4 and by the American Law Instituten5 is that if there is any doubt whether the offeror has prescribed an exclusive mode of acceptance, the offeree may accept in any reasonable manner. If the offeror has prescribed no mode of acceptance and if the offeree has not adopted some mode suggested by the offeror, however, it must be determined whether or not the mode actually adopted is to be deemed reasonable. Where the offeree has this choice of modes of performance, commencement of performance or a tender of it operates as a promise to render complete performance: a bilateral contract is created.n6

It is obvious that there may be alternative modes of acceptance of a single offer. Thus, if a buyer sends an order for goods, there are many cases in which it has been held that the offeree can accept either by shipping the goods at once or by mailing a letter of acceptance.n7 The Uniform Commercial Code has explicitly adopted the rule of these cases. Section 2-206(1)(b) provides that ''an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the current shipment of conforming or non-conforming goods....''n8 If the goods are non-conforming, the shipment is at once an acceptance and a breach.n9

Of course, when the buyer orders the goods, the buyer can specify one exclusive mode of acceptance.n10 The order can require immediate shipment as the only form, or can require immediate acceptance by fax. But the ordinary order for goods, in accordance with some catalog or list or solicitation, does neither of these things. It may be quite reasonable to accept by shipment, by writing, by telegram or telephone.

An employer may offer a promise of employment at specified wages in such a manner as to empower the offeree to accept either by actually beginning work or by promising to go to work.n11 Beginning work in response to the offer would nearly always justify the inference of a promise to complete it. Actual shipment of part of the goods ordered, if in accordance with an installment order or with custom or course of dealing, may justify the inference of a promise that the balance will be shipped.n12 If the order is for shipment in one lot, shipment of less may operate as an acceptance and a breach at the same time,n13 but it may also be no more than a return offer to sell the part shipped or a performance in accordance with an urgent request and for the accommodation of the buyer.n14 Absent a prescribed method of acceptance, an offer to purchase a mortgage can be accepted by tendering the requested documents or by promising to do so.n15

Ordinarily, one who makes an offer to sell property for a price contemplates a bilateral contract and expects a notice of acceptance. This is true even though the offer is in the form of an irrevocable option to buy.n16 Nevertheless, in such a case the offeree can accept by making a tender of the price without other notice. If the offeror accepts the tender, the resulting payment may constitute full performance by the buyer and the resulting contract is unilateral. If the offeror rejects the tender, the rejection is a breach of contract for which the buyer can maintain suit for damages or other appropriate remedy.n17

The offer of a reward for specified services may be so worded that it may be reasonably interpreted as a promise to pay for any one of two or more acts. Thus, the offer of a reward for the apprehension of a fugitive may be interpreted so that acceptance can consist either of the actual seizure of the fugitive or by the giving of information to officers who are caused thereby to arrest him.n18 In either case, the contract when made is unilateral, but the services performed are not the same. Interpretation is not always easy, but the offeror chooses the words used and their interpretation should be liberal in favor of the offeree.n19

Power to accept a single offer by either of two methods is not the same as power to accept either of two alternative offers. If a party makes two alternative offers, the road is open for the making of two different contracts with different terms and subject matter.n20

A case excellently illustrating this Section is Durasteel Co. v. Great Lakes Steel Corp. n21 An order for goods was given, specifying that its acceptance would be a cancellation and discharge of all previous orders. The letter continued: ''We will very much appreciate your sending through the acknowledgments of these orders as quickly as possible and that you do everything possible to get the shipment to us as early as you can in September.'' There was a dispute as to the mailing and receipt of an acknowledgment. The court held that the words quoted above did not make acceptance by mail an absolute condition. Some shipments under the order were made, received, and paid for. These facts constituted a sufficient acceptance.

A noteworthy case with which this treatise disagrees is Lazarus v. American Motors Corp. n22 The defendant sent a purchase order for steel, stating this: ''In accepting this order you agree to all the terms and conditions set forth both on face and reverse side hereof. You further agree that either the delivery of any item covered by this order or the written approval of this order shall constitute an acceptance thereof.'' The plaintiff sent no written approval of the order, but ''numerous deliveries of steel were made ... pursuant to the purchase order and payment was made'' by the defendant. ''However, 565 tons of steel included in the purchase order were not delivered'', and the defendant canceled its order because the steel strike had ended and prices had fallen. The court held that the plaintiff, by using the first alternative mode of acceptance, had not consummated a ''bilateral'' contract, and that the defendant's notice of revocation before any action by the plaintiff toward shipping the 565 tons prevented the creation of a ''unilateral'' contract. This treatise interprets the purchase order differently. The offer by defendant was for the purchase of one entire quantity in specified shapes and sizes for delivery in installments within a specified time. The power of acceptance was limited to a single acceptance of the entire order. Piecemeal acceptances were not authorized. Two methods of indicating to the offeror the making of this single acceptance were by a writing or by the ''delivery of any item.'' The delivery of such an item would indeed be an ''act'' (so also would be the mailing of a letter), but it would be an act that manifested an intention to promise complete performance. See § 3.8 above. The act of acceptance in this case consummated a ''bilateral'' contract, as the defendant would have been prompt to assert if the steel strike had continued and the plaintiff had refused to deliver the 565 tons. If so, defendant's cancellation was a breach.

Legal Topics:

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

Commercial Law (UCC)Sales (Article 2)Form, Formation & ReadjustmentOffer & AcceptanceContracts LawFormationAcceptanceMethods of AcceptanceGeneral OverviewContracts LawTypes of ContractsBilateral ContractsContracts LawTypes of ContractsUnilateral ContractsGeneral Overview

FOOTNOTES:

(n1)Footnote 1. Section 2.32, above. This § 3.23 is best read together with § 2.32.

(n2)Footnote 2. Girves v. Kenai Peninsula Borough, 536 P.2d 1221 (Alaska 1975) . The federal government by statute offered a right of way over public lands. An Alaskan statute subsequently provided for the dedication of rights of way. In the absence of any statement in the federal statute as to how the offer was to be accepted, the Alaskan statute was an acceptance of the federal offer.

(n3)Footnote 3. When the offeree logs offers as received, it does not thereby manifest assent. Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 1983-1 Trade Cas. (CCH) P65239 (9th Cir.1983) , cert. denied, 465 U.S. 1038 . Consequently, the offeree-seller cannot be in breach for shipping late. If the offer is still open, the ''late'' shipment is the acceptance, otherwise it is a counter-offer.

The offeree's assignment by computer of a tracking number to an order is no acceptance. Corinthian Pharmaceutical Systems, Inc. v. Lederle Labs., 724 F.Supp. 605 (S.D. Ind. 1989) .

(n4)Footnote 4. U.C.C. § 2-206.

(n5)Footnote 5. Restatement (Second) of Contracts § 32, quoted in § 2.32 of this treatise.

(n6)Footnote 6. Uniform Commercial Code § 2-206; Restatement (Second) of Contracts § 62.

(n7)Footnote 7. In the following cases an order for goods was held properly accepted by shipment without a notice of acceptance:

U.S. - Lang & Gros Mfg. Co. v. Ft. Wayne Corrugated Paper Co., 278 Fed. 483 (7th Cir.1921) .

Ala. - Sturdivant v. Mt. Dixie Sanitarium, Land & Invest. Co., 197 Ala. 280, 72 So. 502 (1916) .

Ill. - Schmidt v. Marine Milk Condensing Co., 197 Ill.App. 279 (1915) .

Iowa - Petroleum Products Distributing Co. v. Alton Tank Line, 165 Iowa 398, 146 N.W. 52 (1914) .

Mich. - National Cash Register Co. v. Dehn, 139 Mich. 406, 102 N.W. 965 (1905) .

Mo. - Williams v. Emerson-Brantingham Implement Co., 198 S.W. 425 (Mo.App.1917) , but shipment to seller's own agent is not enough.

N.C. - Crook v. Cowan, 64 N.C. 743 (1870) , order to make up and ship two carpets C.O.D.

W.Va. - Wood & Brooks Co. v. D.E. Hewitt Lumber Co., 89 W.Va. 254, 109 S.E. 242, 19 A.L.R. 467 (1921) .

Wis. - Hawkinson v. Harmon, 69 Wis. 551, 35 N.W. 28 (1887) .

Eng. -Brogden v. Metrop. R. Co., L.R. 2 App.Cas. 666 (1877, H.L.).

In De Angelis Coal Co. v. Sharples Corp., 231 F.2d 1 (9th Cir.1956) , the buyer of a machine asserted breach of warranty and asked to return it, with cancellation of contract. The seller wrote offering to take the machine back, if buyer would pay a service charge of 25%. Buyer replied that he would take the offer under advisement. Six days later he shipped the machine to the seller. Before receiving it, the seller wrote demanding the price. Buyer replied that he had returned the machine and refused to pay the 25% service charge. The court held that on these facts no rescission contract had been consummated. The shipment of the machine by the buyer, without more, was not interpreted as an acceptance of the seller's offer, because it was not unequivocal. It could mean instead that the buyer was exercising a right of return for breach of warranty.

In Shortridge v. Ghio, 253 S.W.2d 838 (Mo.App.1952) , the court held that the terms of a written offer were such as to require signature by the offeree as acceptance.

In McCarty v. Langdeau, 337 S.W.2d 407 (Tex.Civ.App.1960) , writ ref. n.r.e., the defendant subscribed for shares in a corporation promising to pay in installments. Certain payments were made, and certificates of stock were issued as payments were made. These facts showed an acceptance by the corporation of the subscription as made. Action lay for the balance promised by the subscriber.

In Calo, Inc. v. AMF Pinspotters, Inc., 31 Ill.App.2d 2, 176 N.E.2d 1 (1961) , the plaintiff's offer to purchase certain equipment was accepted by the defendant's requesting and receiving a payment of $5,000 on account, even though it did not sign the purchase order. By its act, the defendant promised to deliver the equipment. See note under § 3.8.

This section is cited in Western Newspaper Union v. Woodward, 133 F.Supp. 17, 24 (W.D.Mo.1955) , holding that when one makes fraudulent representations that induce another to accept an offer to buy shares, such acceptance being by a corporate resolution in New York, the contract to sell is consummated in New York. The fraudulent tort was then complete (and governed by New York law) even though the notice of acceptance and the certificates of stock were delivered elsewhere. See also § 931.

(n8)Footnote 8.

U.S. - Joseph Muller Corp. v. Commonwealth Petrochemicals, 334 F.Supp. 1013, 1019 (S.D.N.Y.1971) , applying the U.C.C. as federal common law.

(n9)Footnote 9. In Wheaton Glass Co. v. Pharmex, Inc., 548 F.Supp. 1242 (D.N.J.1982) , the facts may have been: (1) an order for glass bottles was placed, (2) defective bottles were shipped and received, and (3) the seller's ''order billing'' form, containing additional terms was received. Under this version of the facts, the seller had accepted the offer and the terms of the seller's order billing form were irrelevant.

(n10)Footnote 10. In Southwestern Stationery & Bank Supply, Inc. v. Harris Corp., 624 F.2d 168 (10th Cir.1980) , the seller provided a purchase order to the buyer for the purchase of a used printing press. On April 29, the buyer completed the purchase order and sent it to the seller, together with a part payment check and a letter of credit for the balance. On June 10, seller returned the check and letter of credit, rejecting the offer. The following language was held to prescribe an exclusive means of acceptance: ''This order is subject to acceptance by Seller at its home office written herein. Thereupon, Seller shall mail to Purchaser a signed duplicate copy hereof, and the same shall constitute the entire contract between the parties....'' No shipment had been made, but the buyer alleged an oral acceptance. There being no signed duplicate, there was no contract. Query, can it be said that the offer, drafted by the offeree, was ''unambiguous'' as to the exclusive means of acceptance?

In United Brotherhood of Carpenters v. Backman Sheet Metal Works, Inc., 598 F.Supp. 212 (S.D.Ohio 1984) , a subcontractor was protected against strikes if it was a party to a collective bargaining agreement providing such protection. The agreement, negotiated by the general contractor, provided ''[e]ach subcontractor who performs work at the jobsite shall become signatory and a party to this agreement by signing the Letter of Assent attached hereto....'' The subcontractor did not sign the agreement. The court found that the subcontractor had accepted either orally or by commencing performance, saying: ''It is noteworthy that the clause does not state that acceptance of the offer can be made only by signing the Letter of Assent.''

(n11)Footnote 11.

Mo. - Daggett v. Kansas City Structural Steel Co., 334 Mo. 207, 65 S.W.2d 1036 (1933) , cert. denied, 292 U.S. 630 (1934) .

Tex. - Fujimoto v. Rio Grande Pickle Co., 414 F.2d 648 (5th Cir.1969) . An offer was made in a written ''contract'' signed by the employer. The employees did not sign, but kept the employer's written document and proceeded with the work. This sufficiently indicated their assent.

(n12)Footnote 12.

U.S. - Lang & Gros Mfg. Co. v. Ft. Wayne Corrugated Paper Co., 278 Fed. 483 (7th Cir.1921) .

W.Va. - Wood & Brooks Co. v. Hewitt Lumber Co., 89 W.Va. 254, 109 S.E. 242, 19 A.L.R. 467 (1921) .

(n13)Footnote 13. See Uniform Commercial Code § 2-206 (1)(b).

(n14)Footnote 14. Uniform Commercial Code § 2-206(1)(b); Senner & Kaplan Co. v. Gera Mills, 185 App.Div. 562, 173 N.Y.S. 265 (1918) .

(n15)Footnote 15. Hauk v. First Nat. Bank, 680 S.W.2d 771 (Mo.App.1984) . Such an offer was made, stating in part: ''I wish to inform you that this money is available to you at any time at the First National Bank that you should elect to take it. You have only to contact Mr. Tom Boschert, President of the Bank, to receive this payment, and of course, surrender your note and deed of trust and execute a deed of release. All of these await you at the First National Bank.'' Plaintiff expressed his acceptance to Mr. Boschert at the bank by a mailgrammed message. Defendant argued unsuccessfully that the offer could be accepted only by performance.

(n16)Footnote 16. In Gleeson v. Frahm, 211 Neb. 677, 320 N.W.2d 95 (1982) , the defendant had given the plaintiff an option to purchase specified real property, the option to remain open until January 1, 1980. The terms required a 25% payment of the price. The plaintiff sent a notice of acceptance that was received on December 29, 1979, but included no part of the payment. When the defendants refused to proceed, the plaintiffs brought an action for specific performance. It was held that, because the option did not specify how it was to be accepted, the plaintiffs could accept in any reasonable way, including a promise to perform the terms of the option agreement.

(n17)Footnote 17.

Idaho - Kessler v. Pruitt, 14 Idaho 175, 93 P. 965 (1908) . See § 264, Option Contracts, Form of Acceptance.

(n18)Footnote 18. See § 3.10 above.

(n19)Footnote 19.

U.S. - McClaughry v. King, 147 Fed. 463 (8th Cir.1906) .

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

See Shuey v. United States, 92 U.S. (2 Otto) 73, 23 L.Ed. 697 (1876) , where two different sums were offered, one for ''apprehension'' and the other for ''information''.

(n20)Footnote 20. Thus, in Collin v. Wetzel, 163 Md. 194, 161 A. 18 (1932) , one of two joint tenants offered either to buy the other tenant's interest, or to sell his own interest to the other, for the sum of $900. This created in the other tenant, the offeree, a power to sell and a power to buy. Only one of these two powers could be exercised. The exercise of one of them would make one contract. The exercise of the other would make a very different one.

(n21)Footnote 21. 205 F.2d 438 (8th Cir.1953) .

(n22)Footnote 22. 21 Wis.2d 76, 123 N.W.2d 548 (1963) .