Kibler v. Caplis

Supreme Court of Michigan · Contracts

ContractsOption contractsAcceptanceParol evidenceSalesoption contracttimely acceptancereceipt rule

Facts

Defendant gave plaintiffs a written option on October 5, 1901, to buy his hides at ten cents per pound, with the option expiring Tuesday noon, October 8, 1901, and with specified preparation conditions for the hides. Plaintiffs claimed they accepted by sending a telegram on October 7 and mailing a confirming letter the same day, while defendant testified he never received the telegram and did not receive the letter until after noon on October 8. At trial, defendant was also allowed to testify that the parties had orally agreed that $1,000 would be paid down upon acceptance, though plaintiffs denied any such agreement. The trial court also excluded evidence of Chicago market prices for hides, despite testimony that the Chicago market guided purchases in Detroit.

Issue

Whether plaintiffs timely and effectively accepted the option, whether mailing or sending a telegram constituted sufficient acceptance without actual receipt by the defendant, whether parol evidence could add a $1,000 down-payment term to the written option, whether payment had to precede preparation and weighing of the hides, and whether Chicago market evidence was admissible to prove value.

Rule

There is a presumption that properly mailed letters and properly transmitted telegrams are forwarded and received, but when receipt is disputed the timing of receipt is a question of fact. For an option expiring at a stated time, the optionor is not bound unless actually notified of acceptance by that time. If a written, unambiguous sales option is silent as to time and manner of payment, delivery and payment are concurrent acts, and parol evidence is inadmissible to add a prior or contemporaneous oral down-payment term. Evidence of another market's prices is admissible where that market in a measure controls the local market value.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Cleveland, Owen Mercer gave Dana Iqbal a signed written option to buy 400 wool pelts at a stated price, with the option expiring at 12:00 p.m. on Friday. Dana mailed an acceptance from Pittsburgh at 10:00 a.m. Friday, but Owen did not receive it until Saturday morning.

Is Owen bound under the option?

Explanation. For an option that expires at a stated time, dispatch alone is insufficient. The optionor is not bound unless actually notified of acceptance by the deadline. Here, the letter was mailed before noon but was not received until Saturday, so the option expired without timely communicated acceptance. (Derived from Kibler v. Caplis (n.d.).)