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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 § 3.30

§ 3.30 Acceptance Not Conditional, Even Though Grumbling or Accompanied by a Request or by a New Offer

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An expression of acceptance is not prevented from being exact and unconditional by the fact that it is ''grumbling,''n1 or that the offeree makes some simultaneous ''request'';n2 but it must appear that the ''grumble'' does not go so far as to make it doubtful that the expression is really one of assent, and that the offeree has assented to the offer even though the offeror shall refuse to comply with the ''request.'' The following would be a valid acceptance: ''I accept your offer as made, but I still insist that you are driving a very hard bargain.'' This has been described as a ''grumbling assent.'' A plain acceptance of an offer to sell goods is not invalidated by adding, ''Please ship tomorrow if possible.''n3 Nor is it invalidated by a request that the contract already made shall be reduced to writing;n4 but the fact that a formal document is contemplated is some evidence of an intention not to be bound until the document is executed. If the acceptance is unconditional, a proposal for credit terms does not prevent the formation of a contract.n5 As stated by the American Law Institute: ''An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on the assent to the changed or added terms.''n6

An acceptance is not invalidated by the fact that the offeree, in the same letter, makes an offer to buy additional goods, if it is clear that this new offer is wholly independent of the acceptance.n7

It is possible that this may be made clear even though the new offer is one the acceptance of which will make a new contract that is a substitute for the first one and will operate as a discharge.n8

In Valashinas v. Koniuto, n9 an offer to buy a partner's interest was definitely accepted by the offeree, with the added statement that the offeree would be ready to close and to make conveyance ''as of December 31, 1952, or sooner if you so choose.'' In a subsequent letter he wrote: ''If I do not hear from you, I will assume that it is your intention to close on Dec. 31 or within a reasonable time thereafter; at any rate, please let me know.'' Thereafter, the offeror gave notice of revocation. The court held that a contract was made and decreed specific performance.

The decision in the above case was affirmed,n10 but two judges vigorously dissented, calling attention to the words of the offeree's letter of acceptance, in which, after unconditional words of acceptance, he said: ''I will be ready [to give Bill of Sale and conveyances] ... as of December 31st, 1952, or sooner if you so choose. Such instruments will be delivered to you, properly executed by me, no later than December 31st, 1952 at the offices of attorneys, Chernin & Gold, Binghamton, N.Y. upon payment by you in accordance with the terms of your offer.'' The judges differed only in their interpretation of the terms of this letter, the minority thinking that these terms put a definite time limit on closing, payment and conveyance and made time of the essence (with a quotation from § 715 of this treatise). If this interpretation is the reasonable one and was actually given the words by the offeror, the conclusion of the dissenters is the correct one. The offer indicated no time for closing, with the result that both parties would have a ''reasonable time.'' If the offeree merely ''suggested'' a particular time, it would not affect the acceptance. But contra if he fixed a definite time limit, and if this limit was less than the ''reasonable time.'' These, however, are matters on which reasonable persons could, and actually did, differ. They are matters of fact, and their decision does not affect accepted rules of law. See also note herein under § 268, as to analysis of the options created.

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

Contracts LawFormationOffersGeneral OverviewContracts LawTypes of ContractsExecutory ContractsContracts LawFormationAcceptanceGeneral Overview

FOOTNOTES:

(n1)Footnote 1.

Alaska - Kodiak Island Borough v. Large, 622 P.2d 440 (Alaska 1981) . The Borough offered to sell a parcel of land to Large for $10,550. Large sent a letter accepting and added a proposal that the down payment be 10%, with the balance payable over 10 years at 6% interest, these being the Borough's standard terms. The newly elected Borough assembly declined to go through with the sale. It was held that the acceptance was valid, ''the fact that it is accompanied by a request or a direction looking to the performance of the contract does not render the acceptance ineffective nor give it the character of a counter-offer so long as it does not limit the contract.'' 622 P.2d at 448 .

Ark. - Radford & Guise v. Practical Premium Co., 125 Ark. 199, 188 S.W. 562 (1916) .

Fla. - Conger Life Ins. Co. v. Deimel, 441 So.2d 1116 (Fla.App.1983) , rehearing denied. Plaintiff broker produced a corporate client that purchased a group policy from the defendant. The plaintiff was to receive a 10% commission on the premiums paid and would continue to service the group. The policy was renewed on the same terms for several years. In late 1977 the insurer notified plaintiff that the policy would be renewed for 1978 only at a 25% increase in premium and a reduction of commission to 5%. Plaintiff objected, searched for another insurer, but the group decided to stay with the defendant company and plaintiff acted as intermediary in arranging the renewal. It was held that plaintiff by conduct acquiesced in the insurer's offered terms. Plaintiff could not accept part of the offered terms and reject the rest.

Hawaii - Brangier v. Rosenthal, 337 F.2d 952 (9th Cir.1964) .

Mich. - Johnson v. Federal Union Surety Co., 187 Mich. 454, 467, 153 N.W. 788, 792 (1915) .

Okl. -In Price v. Oklahoma College of Osteopathic Medicine and Surgery, 733 P.2d 1357 (Okl.App.1986) , rehearing & cert. denied, a tenured professor was offered his annual contract renewal. He signed on the requested signature line, but added below: ''Signed under protest that salary does not reflect guarantees under present and past personnel policies and that proper evaluation procedures were not followed.'' This was held to be an unequivocal acceptance. In Home Gas Co. v. Magnolia Petroleum Co., 143 Okl. 112, 287 P. 1033 (1930) , an unequivocal acceptance also stated: ''I feel sure you will want to change your letter to'' 3500 feet instead of 3700 feet. See also Foster v. West Pub. Co., 77 Okl. 114, 186 P. 1083 (1920) ; Raydon Exploration Co. v. Ladd, 902 F.2d 1496 (10th Cir.1990) (collateral matters in acceptance).

Wash. - Mall Tool Co. v. Far West Equipment Co., 45 Wash.2d 158, 273 P.2d 652 (1954) , there was a ''reluctant acquiescence'' by one party in a modification of an existing contract proposed by the other party.

Wyo. -Defendant offered in a detailed writing to reinstate plaintiff in his job. He signed the writing after the words ''Understood, Agreed To and Accepted.'' He also wrote that he wanted an opportunity to see his personnel file and to have any mistakes it might contain corrected. There was a valid acceptance. First, the right to examine one's personnel file was consistent with company policy as to all employees and thus implicit in the offer. Second, the requests do not appear to have been made a condition to the acceptance.

In Acadia, California, Ltd. v. Herbert, 54 Cal.2d 328, 5 Cal.Rptr. 686, 353 P.2d 294 (1960) , the defendant was bound by a written contract to supply a stated amount of water to the plaintiff for domestic use. Performance was unsatisfactory, and the plaintiff offered to prepay $1,000 of the future rental to defray the cost of improving the supply. The defendant installed improvements and sent a bill to plaintiff. The latter sent its check to the defendant, stating that its acceptance would confirm the understanding that the improved facilities would be continued. The defendant cashed the check, but wrote to the plaintiff that it was accepted upon the basis of the previous written agreement. The court held that the cashing of the check operated as an assent to the conditions on which it was tendered. This is similar to the cases holding that cashing a check tendered in full satisfaction of a disputed claim operates as satisfaction even though the recipient denies that it is so accepted. Here, however, the cashing of the check is the expression of a promise, while in the cases of accord and satisfaction it is the discharge of a claim, although it may also be promissory if the check is tendered as an offer of a substituted executory contract. In the instant case, the court said: ''Where something to which the offeree is not unconditionally entitled is tendered to him upon stated conditions and he exercises dominion over it, he is bound by the conditions even though he informs the offeror that he rejects them.'' See the discussion in § 1279.

(n2)Footnote 2.

U.S. - Netherwood v. Raymer, 253 Fed. 515 (W.D.Wis.1918) , aff'd, 257 Fed. 284 (7th Cir.) .

Iowa - Culton v. Gilchrist, 92 Iowa 718, 61 N.W. 384 (1894) , acceptance of a lease, with a request to be permitted to build a small cook room.

La. - Vordenbaumen v. Gray, 189 So. 342 (La.App.1939) .

Minn. - Podany v. Erickson, 235 Minn. 36, 49 N.W.2d 193 (1951) ; Alpha Venture/Vantage Properties v. Creative Carton Corp., 370 N.W.2d 649 (Minn.App.1985) , a request that the offeror share in paying a broker's commission.

N.D. - Stonewood Hotel Corp. v. Davis Development, Inc., 447 N.W.2d 286 (N.D.1989) , companion case 452 N.W.2d 94 (1990) ; Horgan v. Russell, 24 N.D. 490, 140 N.W. 99 (1913) .

Nev. - Pravorne v. McLeod, 79 Nev. 341, 383 P.2d 855 (1963) .

N.Y. - Knapp v. McFarland, 344 F.Supp. 601 (S.D.N.Y.1971) , aff'd in part, rev'd in part, 457 F.2d 881 (2d Cir.) , cert. denied, 409 U.S. 850 .

Pa. -''Under Pennsylvania law, a reply which suggests changes or additions to the terms of an offer may be either an acceptance or a counteroffer, and the question is for the jury to decide.'' Honeywell, Inc. v. American Standards Testing Bureau, Inc., 851 F.2d 652, 659 (3d Cir.1988) , reh'g denied, cert. denied, 488 U.S. 1010 , later proceedings too extensive to cite here.

Va. - McAfee v. Brewer, 214 Va. 579, 203 S.E.2d 129 (1974) . Defendants contracted to buy plaintiff's house. The seller, after negotiations, offered to sell certain furniture located in the house. Under the terms of the offer, defendants were to pay $3,000 on acceptance. Plaintiff sent a letter stating in part: ''Enclosing a $3000 check... [Please] include the red secretary on the contract for entrance foyer. I'll have to stop by sometime during the month & order a coffee table.'' The court found a contract had been formed, the request for the red secretary being a mere proposal for addition to the contract. Although the Uniform Commercial Code was applied, the result is consistent with the common law.

Vt. - Ackerman v. Carpenter, 113 Vt. 77, 29 A.2d 922 (1943) .

W.Va. - E.T. Barnum Iron Works v. Prescott Construction Co., 86 W.Va. 173, 102 S.E. 860 (1920) ; Turner v. McCormick, 56 W.Va. 161, 49 S.E. 28 (1904) , offer accepted ''and respectfully request you to make delivery of deed with abstract of title to me in Morgantown''.

Wis. - Curtis Land & Loan Co. v. Interior Land Co., 137 Wis. 341, 118 N.W. 853, 129 Am.St.Rep. 1068 (1908) , request to close land sale at a named bank.

Eng. -Simpson v. Hughes, 66 L.J. Ch. 334 (1897).

A letter saying that the offer ''is hereby accepted. Please forward deed and abstract of title to the W. Bank, with instructions to let us inspect the papers, and if the title is found perfect, to deliver to us on payment of $6,000,'' was held to be an unconditional acceptance in Kreutzer v. Lynch, 122 Wis. 474, 100 N.W. 887 (1904) .

In Skinner v. Stone, 144 Ark. 353, 222 S.W. 360, 11 A.L.R. 808 (1920) , an offeree accepting ''your offer to take $2,500 cash for this land,'' enclosing a form of deed for execution, and adding: ''attach draft to deed and send to Merchants' Bank and I will take care of same.'' The acceptance was held not to be made conditional on the particular form of payment.

In Holt v. Stofflet, 334 Mich. 272, 54 N.W.2d 593 (1952) , reh'g denied, 334 Mich. 272, 55 N.W.2d 170 , a notice of acceptance by an option holder was not made ineffective by the fact that it contained the words, ''and request that you have the deed of purchase and the abstract of title in their hands in ample time before the first day of June, 1951, in order that same may be examined.''

A request for an abstract of title may be so made as to lead to the inference that the buyer's acceptance of an offer to sell land is conditional on the furnishing of an abstract.

See:

Minn. - Brearley v. Schoening, 168 Minn. 447, 210 N.W. 588 (1926) .

N.D. - Ness v. Larson, 41 N.D. 211, 170 N.W. 623 (1918) .

Other cases similarly holding that the offeree's acceptance was not made ineffective by his making a suggestion or a request as to time or place for transfer and payment:

Ga. - Whelchel v. Waters, 152 Ga. 614, 111 S.E. 25 (1922) ; Crystal Cubes of Stone Mountain, Inc. v. Kutz, 201 Ga.App. 338, 411 S.E.2d 53 (1991) .

Utah - Chournos v. Evona Inv. Co., 97 Utah 335, 93 P.2d 450 (1939) , reh'g denied, 97 Utah 346, 94 P.2d 470 .

Wis. - Matteson v. Scofield, 27 Wis. 671 (1871) .

If an offer to sell property specifies the time or place for transfer and payment, an attempted acceptance that does not assent to that time and place is inoperative. Swanson v. Linder, 75 N.D. 751, 33 N.W.2d 62 (1948) ; Cram v. Long, 154 Wis. 13, 142 N.W. 267 (1913) . If the offer specifies no time or place, frequent inference is that payment and transfer shall be at the offeror's residence. The offeree can accept only in accordance with that inference. If the offeree specifies a different time or place there is no contract. Rahm v. Cummings, 131 Minn. 141, 155 N.W. 201 (1915) ; Anderson v. Stewart, 149 Neb. 660, 32 N.W.2d 140, 3 A.L.R.2d 250 (1948) ; Whitaker-Glessner Co. v. Clark, 98 W.Va. 19, 126 S.E. 340 (1925) . Some courts may be too ready to interpret words of ''request'' as making the acceptance conditional.

This section is cited in Killam v. Tenney, 229 Or. 134, 366 P.2d 739, 749 (1961) , holding that, after an option holder had clearly exercised his power of acceptance, a letter relating to matters of performance (valuation of inventory and appointment of an escrow holder) did not make the acceptance conditional. ''It was not even a 'grumbling' acceptance.'' Also, even if the letter requested a change of terms, it would not invalidate the previous acceptance. See also § 857; § 264.

(n3)Footnote 3.

Me. - Simpson v. Emmons, 116 Me. 14, 99 A. 658 (1917) .

Idaho - Braun v. Camas Prairie R. Co., 72 Idaho 83, 237 P.2d 604 (1951) , acceptance of railroad's offer of $400 in settlement, adding ''However, I wish you would reconsider and at least split the difference'' (giving reasons).

(n4)Footnote 4.

N.C. - Billings v. Wilby, 175 N.C. 571, 96 S.E. 50 (1918) .

Vt. - Ackerman v. Carpenter, 113 Vt. 77, 29 A.2d 922 (1943) .

(n5)Footnote 5. Kodiak Island Borough v. Large, 622 P.2d 440 (Alaska 1981) . The municipality offered to sell land to Large. He replied ''I accept the price of $10,550.00 for the 4.22 acres of land... I note that you say you have the power to negotiate, which I presume means to discuss and agree upon the mode of payment. I propose a down-payment of ten percent (or $1000) and propose the payment of the balance over a term of ten years at six (6%) interest on the unpaid balance. Please notify me of a convenient time that we may meet to finalize this matter.'' Id. at 447 . This reply was held to be an unconditional acceptance. See also Hall v. Add-Ventures, Ltd., 695 P.2d 1081 (Alaska 1985) .

(n6)Footnote 6. Restatement (Second) of Contracts § 61.

(n7)Footnote 7. In Purrington v. Grimm, 83 Vt. 466, 76 A. 158 (1910) , in a letter accepting an offer to sell goods, the buyer added: ''Please send also a tapping bit and a reamer.'' The court held that this request did not make the acceptance conditional. It was merely a new offer to buy two additional items for a different price.

(n8)Footnote 8. Wilkins v. Vass Cotton Mills, 176 N.C. 72, 97 S.E. 151 (1918) , ''accept offer; make it 25,000 if can make sixteens.''

In Johnson v. Federal Union Surety Co., 187 Mich. 454, 153 N.W. 788 (1915) , the defendant offered to pay $2,500 in compromise of a disputed claim. The offeree wrote: ''We are still expecting that you will agree to pay us $3,333.33. I would appreciate very much receiving your check for this amount, or if your company is not willing to go along on this, we would thank you to send us the amount pledged by you of $2,500.'' This was held to be an acceptance of the defendant's offer.

In Tinn v. Hoffmann & Co., 29 L.T. (N.S.) 271 (1873), the defendant offered to sell 800 tons iron at 69s., and refused to lower the price, even on a larger order. The buyer then wrote: ''You can enter me 800 tons on the terms specified; but I trust that you will enter me 400 more, making in all 1,200 tons, at 68s.'' The statement of such a ''trust,'' or hope, does not make the order for 800 tons at 69s. a conditional acceptance. But it is a new offer to buy 1,200 tons at 68s., in substitution for the contract just consummated (assuming that the 800 ton offer at 69s. had not yet lapsed).

In Orr v. Doubleday, Page & Co., 223 N.Y. 334, 119 N.E. 552, 1 A.L.R. 338 (1918) , reh'g denied, 223 N.Y. 700, 119 N.E. 1064 , a lessee had an option for a renewal. He gave an otherwise proper notice of acceptance ''with the understanding that this notice is to be withdrawn if the Court consents to accept the transfer of the lease now in process of negotiation to the Irving Place Leasing Co., in which event Orr is to consent to the assignment of our lease to the Irving Place Leasing Co.'' The court interpreted this provision as one ''to withdraw the notification only if the court approved the transfer of the lease and the plaintiff consented to its assignment... It in effect said to them, we intend to renew the lease ... we retain the right to annul our intention in case the specified consent of the court and that of yourselves are had.'' Upon this interpretation the decision was correct. But the validity of the notice of acceptance was dependent upon the fact that the additional provision was totally ineffective without the consent of the lessor. A notice of acceptance of any offer (whether of an irrevocable option or otherwise) is ineffective if it reserves any power of withdrawal without the other party's consent. As interpreted by the court, the notice in this case was merely accompanied by a conditional offer of a substitute arrangement.

(n9)Footnote 9. 283 App.Div. 13, 125 N.Y.S.2d 554 (1953) , aff'd, 308 N.Y. 233, 124 N.E.2d 300 .

(n10)Footnote 10. Valashinas v. Koniuto, 308 N.Y. 233, 124 N.E.2d 300 (1954) . In Parkway Inn, Inc. v. First Federal Savings & Loan Asso., 50 Misc.2d 211, 269 N.Y.S.2d 730 (1966) , aff'd, 27 A.D.2d 704, 279 N.Y.S.2d 1021 (1967) , the court compared the alleged acceptance of plaintiff's offer to borrow money with that of the Valashinas case and correctly found that the acceptance was conditional.

Similar to Valishinas is Martindell v. Fiduciary Counsel, Inc., 131 N.J.Eq. 523, 26 A.2d 171 (1942) , aff'd, 133 N.J.Eq. 408, 30 A.2d 281 . A gave B an option to purchase 27 shares of certain stock. Within the time specified in the option, the optionee wrote as follows: ''I hereby exercise my option. I have deposited the purchase price with the Colorado National Bank to be delivered to you upon transfer of the stock. If you do not accept such procedure, I demand that you designate the time and place for the same.'' This was held not to be a counter-offer but rather a suggestion of how the contract could be performed.