§ 2.17 Effect of Delay in the Delivery of an Offer

When two persons are negotiating at a distance, and not by telephone, it is possible that there will be some unexpected delay in the delivery of the offer to the offeree. A letter may be delayed in the mail; and a private messenger may fall ill on the way or be negligent and forgetful, or depart intentionally from due performance of the task. In the case of private business offers, it is usually held that there is no power of acceptance until the offer is received by the offeree,n1 and the question arises as to whether the delay will limit the time within which the offeree can accept or will even prevent any power of acceptance from existing at all.

If, at the time the offer is received, the time specified for acceptance has not expired yet, or the time that would have been reasonable had the offer been received without delay has not yet expired, there is no doubt that the offeree has a power of acceptance. If such time for acceptance has expired already and the offeree knows or has reason to know it, the courts are likely to hold that there is no power of acceptance at all. If the offeree neither knows nor has reason to know that the time has expired, there is a power to accept. The offeror must be held to have taken the risks of delay in the delivery of the offer, in so far as those risks cannot be minimized or avoided by reasonable prudence and understanding on the part of the offeree. If the latter is not warned by the terms of the offer and has no other reason to know of the delay, the power of acceptance will continue from the time of receipt just as if no delay had occurred. In most cases, however, the offeree will have some indication of the delay from the date of the letter, the postmarks, the condition of the envelope, or statements of the messenger. All such indications must be considered.n2

In a well-known English case, an offer to sell wool was mailed to the offeree, incorrectly addressing it to Bromsgrove, Leicestershire, instead of Bromsgrove, Worcestershire. This caused a delay of two days in the mails. An acceptance, mailed immediately upon receipt of the offer was held to consummate a contract, even though the offer said ''receiving your answer in course of post'' and the offeror had sold his wool before the answer in fact arrived.n3

A similar case was decided in the same way by the United States Supreme Court. An offer to insure against loss by fire was mailed on December 2 to the plaintiff at an incorrect address; it was not received until December 20. The offeree accepted on the terms proposed and mailed the acceptance on December 21. The insured dwelling was burned on December 22, before the letter of acceptance was delivered. The contract to insure was held consummated.n4 This decision should be approved, even though the offeree had reason to know of the delay, since there had been no change in insurance rates or in the risks of loss by fire. Under all the circumstances a reasonable time had not expired.

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FOOTNOTES:

(n1)Footnote 1. According to the Uniform Commercial Code § 1-201(26) ''A person ''receives' a notice or notification when (a) it comes to his attention; or (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.'' By its terms the provision is not applicable to receipt of offers, but it can be applied by analogy. See § 1.22 above.

(n2)Footnote 2.

N.Y. - Chesebrough v. Western Union Tel. Co., 76 Misc. 516, 135 N.Y.S. 583 (1912) , aff'd, 157 App.Div. 914, 142 N.Y.S. 1112 . This reasoning is adopted by Restatement (Second) of Contracts § 49, which provides: ''If communication to the offeree is delayed, the period within which a contract can be created by acceptance is not thereby extended if the offeree knows or has reason to know of the delay, though it is due to the fault of the offeror; but if the delay is due to the fault of the offeror or to the means of transmission adopted by him, and the offeree neither knows or has reason to know that there has been delay, a contract can be created by acceptance within the period which would have been permissible if the offer had been dispatched at the time that its arrival seems to indicate.''

(n3)Footnote 3.

Eng. -Adams v. Lindsell, 1 B. & Ald. 681 (1818). If the date, the postmark, or other facts, had given warning to the offeree of the delay, and he should have known that the offeror would not regard the delayed answer as being ''in course of post,'' the decision should have been the other way. The decision is followed in Caldwell v. Cline, 109 W.Va. 553, 156 S.E. 55, 72 A.L.R. 1211 (1930) , a case in which the offeree might well have been held to have notice of the delay and to have accepted too late.

(n4)Footnote 4.

U.S. - Tayloe v. Merchants' Fire Ins. Co., 50 U.S. (9 How.) 390, 13 L.Ed. 187 (1850) .