Facts
- Defendants, merchants in New York City, sought to have plaintiff, a builder, fit up offices at 57 Broadway and requested a cost estimate.
- Plaintiff submitted an estimate; defendants later revised specifications, which plaintiff signed and returned.
- Defendants sent a written note stating: “Upon an agreement to finish the fitting up of offices 57 Broadway in two weeks from date, you can begin at once,” indicating further discussion would follow.
- Plaintiff did not send a reply or other notice of assent to defendants.
- After receiving the note, plaintiff purchased lumber and began preparatory work on materials.
- Before receiving any communication of acceptance, defendants sent a second written communication countermanding the prior note.
- Plaintiff sued for breach of contract, claiming his commencement of performance accepted the offer.
- A jury found for plaintiff; the trial court’s charge permitted acceptance without notice. The intermediate appellate court affirmed.
Issues
- Whether an offeree’s uncommunicated preparatory acts (purchasing materials and beginning work) constitute acceptance of an offer when the parties are not together.
- Whether acceptance must be manifested in a manner reasonably calculated to reach the offeror before the offeror withdraws.
- Whether the trial court erred by instructing the jury that plaintiff could accept by acting on the note without giving notice of assent.
Decision
- The Court of Appeals reversed and ordered a new trial.
- The September 29 note was a proposal requiring acceptance; it did not itself create a contract.
- Plaintiff’s acts were not communicated to defendants and were not, by their nature, an objective indication of acceptance.
- Because no acceptance was manifested in a way placed in the ordinary course of communication to reach defendants, defendants could withdraw before being bound.
- The trial court’s instruction allowing acceptance based solely on plaintiff’s uncommunicated conduct misstated the law of acceptance.
Legal Principles
- Contract formation requires an offer and an acceptance; when parties are not together, acceptance must be manifested by an appropriate act and put in a proper course for reaching the offeror.
- A mental decision to accept, without communicated manifestation, is not acceptance.
- Acts that are objectively ambiguous and as consistent with other purposes as with assent do not constitute acceptance.
- An offeror is not bound if the offeree’s manifestation of acceptance is not placed in a reasonable channel of communication such that, in the usual course, it would reach the offeror.
- Commencing work may serve as acceptance only when the offer, or circumstances, make that conduct a clear mode of acceptance communicated to the offeror.
Conclusion
The court held that no contract was formed because the offeree’s preparatory work and purchase of materials, without notice and without objectively signaling assent, did not accept the offer before it was withdrawn; acceptance required a manifested assent placed in a reasonable course of communication to the offeror.