Minnesota & St. Louis Railway Co. v. Columbus Rolling-Mill Co.

Supreme Court of the United States · 1886 · Contracts

Contractsofferacceptancecounterofferrejectionmirror image rulemutual assentrevival of offer

Facts

On December 8, the defendant offered to sell the plaintiff between 2,000 and 5,000 tons of iron rails on specified terms, stating that if the offer was accepted the defendant expected notice before December 20. On December 16, instead of accepting that range, the plaintiff sent a telegram and letter referring to the December 8 offer and directing the defendant to enter an order for 1,200 tons on the same terms. On December 18, the defendant telegraphed that it declined to fulfill that order. On December 19, the plaintiff attempted to accept the original offer, but the defendant refused.

Issue

Whether the plaintiff formed a contract by first ordering 1,200 tons in response to an offer to sell 2,000 to 5,000 tons, and then later attempting to accept the original offer before December 20. Specifically, did the December 16 response operate as an acceptance or as a rejection of the original offer?

Rule

An offer imposes no obligation until it is accepted according to its terms. A purported acceptance that varies the terms of the offer is a rejection of the offer and ends the negotiation unless the original offeror renews the offer or assents to the modification; a party who has once rejected the offer cannot later revive it by attempting to accept it. If an offer sets a time for acceptance, it may be accepted or rejected within that period so long as it remains open and unrevoked.

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In Cleveland, Orion Metals sent Dana Lopez a signed letter offering to sell "between 800 and 1,500 copper rods" at a stated price, with notice of acceptance requested by May 10. On May 6, Dana replied, "Please book 600 rods on your stated terms." On May 8, Orion refused, and on May 9 Dana sent a second message saying, "I accept your original offer for 800 rods."

Was a contract formed?

Explanation. An offer must be accepted according to its terms. A purported acceptance that changes a term of the offer is a rejection, ending the negotiation unless the offeror renews the offer or assents to the modification. Here, the offer allowed acceptance only for a quantity between 800 and 1,500 rods, and Dana answered with 600, outside the offered range. That response therefore rejected the original offer, so her later attempt to accept 800 rods before the stated deadline was ineffective.