## Facts

- John Petterson owned Brooklyn real property subject to a third mortgage securing a bond held by George Pattberg, with $5,450 unpaid principal as of April 4, 1924, payable in quarterly installments.
- Pattberg sent Petterson a letter stating he would accept cash for the mortgage and allow a $780 reduction if (i) the April 25, 1924 installment was paid when due and (ii) the mortgage was paid in full on or before May 31, 1924.
- Petterson timely paid the April 25 installment.
- In late May 1924, before May 31, Petterson went to Pattberg’s home with cash to pay the mortgage in full.
- At the door, Petterson said he had come to pay off the mortgage; Pattberg responded that he had sold the mortgage.
- After being told this, Petterson displayed the cash and said he was ready to pay according to the agreement; Pattberg refused to accept payment.
- Petterson (or his estate) later paid the full, undiscounted amount to the new holder and sued for $780 plus interest as damages for breach of the discount promise.

## Issues

1. Whether Pattberg’s letter constituted an offer for a unilateral contract, accepted only by completed performance (full payment), rather than by a promise to pay.
2. Whether an offer for a unilateral contract may be revoked at any time before the offeree completes the requested performance.
3. Whether Pattberg effectively revoked the discount offer before acceptance when he stated he had sold the mortgage and refused payment at the door.

## Decision

- The Court of Appeals reversed the judgment for the plaintiff and directed judgment for the defendant.
- The court characterized Pattberg’s letter as an offer for a unilateral contract, requiring full performance (payment in full by May 31) for acceptance.
- The court held the offer was revocable at any time before the requested act was fully performed.
- Because Pattberg’s revocation occurred before Petterson made a legally effective tender completing performance, no contract was formed.
- Two judges dissented, reasoning that Petterson did all he could to perform and that Pattberg prevented completion of the condition.

## Legal Principles

- An offer inviting acceptance only by performance creates a unilateral contract only upon completion of the requested performance.
- Under the court’s rule, a unilateral offer remains revocable until the offeree completes performance; preparation to perform, or arriving ready to perform, does not itself constitute acceptance.
- A purported acceptance that occurs after revocation is ineffective, even if the offeree is ready and willing to perform.
- Absent separate consideration or another recognized basis for irrevocability, a time-limited promise to accept a discounted payoff does not bind the offeror before acceptance by performance.

## Conclusion

The court held that the mortgage-holder’s discount proposal was a unilateral offer that could be revoked before full performance, and that revocation at the door preceded any acceptance by tender; therefore, no contract arose and the estate could not recover the promised $780 reduction.


Petterson v. Pattberg, 248 N.Y. 86, 161 N.E. 428 (N.Y. 1928)