## Facts

- A linseed-oil manufacturer sued a paint manufacturer for $2,151.50 plus interest as the unpaid balance on prior oil sales.
- The defendant asserted a set-off/counterclaim, alleging the parties later formed a separate telegraphic contract for a large quantity of linseed oil that the plaintiff refused to deliver.
- The negotiations occurred in summer 1875, when linseed-oil prices were subject to sudden fluctuations (approximately 55–75¢ per gallon).
- On July 30, the defendant telegraphed an offer to buy 300 barrels at 55¢, on 30-day terms, no commission, for August delivery, requesting an answer.
- On July 31, the plaintiff telegraphed a counter-offer stating it would accept 58¢ on the defendant’s stated terms; the message was not delivered to the defendant until August 2.
- After receiving the counter-offer on Monday, August 2, the defendant waited until Tuesday, August 3 to file a telegraphic acceptance at the telegraph office.
- On August 3, the plaintiff also telegraphed that it was withdrawing its July 31 offer; the defendant responded that the sale had been effected before the withdrawal was received.
- The case was removed to federal court, tried to the court without a jury, and turned on whether the defendant’s acceptance was timely enough to form a binding contract.

## Issues

1. Under contract formation rules for telegraphic communications, when does an acceptance become effective: upon dispatch (filing for transmission) or upon receipt?
2. Whether, given a rapidly fluctuating commodity market and telegraphic dealing, the defendant’s acceptance filed about 24 hours after receiving the offer was within a reasonable time so that the offer remained open.
3. If the offer had lapsed before acceptance, whether the defendant’s set-off/counterclaim for non-delivery failed and the plaintiff could recover the past-due balance.

## Decision

- The court held that telegraphic negotiations are governed by the same rule as mail: an acceptance is effective when deposited for transmission at the telegraph office, not when received.
- The court held that the defendant’s August 3 acceptance was not within a reasonable time after the offer was received, given the volatility of the linseed-oil market and the use of telegraph implying urgency.
- Because the offer had lapsed before the defendant filed its acceptance, no binding contract for the later bulk sale was formed.
- The defendant’s set-off/counterclaim was rejected, and the plaintiff recovered on its claim for the balance due on prior sales (consistent with the amount sought plus interest).

## Legal Principles

- Telegraphic communications are treated like postal communications for contract formation purposes; dispatch of an acceptance through the customary channel generally completes assent.
- The dispatch rule applies only if the offer is still open; an acceptance must be made within a reasonable time after receipt of the offer.
- What constitutes a reasonable time is determined objectively based on the circumstances, including the communication method and the subject matter.
- Where an offer concerns goods traded in a market subject to sudden and substantial price swings, telegraphic dealing calls for an immediate response; a delay of roughly 24 hours after receipt may be unreasonable as a matter of law, causing the offer to lapse.

## Conclusion

The court recognized the dispatch rule for telegraphic acceptances but denied the defendant’s contract claim because, in a fast-moving commodity market, the defendant’s next-day telegraphic acceptance was not within a reasonable time, so the offer had lapsed and no contract was formed.


Minnesota Linseed Oil Co. v. Collier White Lead Co., 17 F. Cas. 447 (C.C.D. Minn. 1876)