Story Case

Lester Bonham wrote the following letter to the Farnam Buggy Company:

"Feb. 18, 1910. Gentlemen: I have for sale a new carriage of my own make which I will sell to you at the same price as the last one. If I do not receive your letter of acceptance by the 30th I shall sell it elsewhere.

(Signed) Lester Bonham".

On the 20th, the Farnam Buggy Co. mailed an acceptance of the offer, which should have reached Bonham by the 22nd. But there was a wreck on the railroad and the letter of acceptance was lost.

On the 1st of March, Bonham sold the buggy to another company.

The Farnam Buggy Co. sued Bonham for his failure to sell the buggy to them and claim that he (Bonham) made the United States mails his agent to deliver the letter to him and that therefore he is bound.

Should the buggy company have won?

Ruling Court Case. Helen Lewis Vs. Matthew Browning, Volume 130 Massachusetts Reports, Page 173

Matthew Browning, previous to the year 1878, had leased certain premises from Helen Lewis, who, with her husband, was living in California. Dr. Lewis, who acted as agent for his wife, Helen, wrote a letter to Browning in which he asked Browning to make him an offer for a new lease of the premises in question. Browning answered, making a new offer by a letter dated July 8,1878. In the reply received by Browning on July 8, Dr. Lewis accepted Browning's offer with certain modifications. The letter concluded with the following statement: "If you agree to this plan, and will telegraph me on receipt of this, I will forward power of attorney to have the lease executed. Telegraph me 'yes' or 'no'. If I do not hear from you by the 18th or 20th, I shall conclude 'no'. On July 17th, Browning replied:'yes'. The message, however, never reached Dr. Lewis. This suit was thereafter brought on the old lease.

Browning contended that he was no longer bound by the old lease; that the dispatch of his telegram was an acceptance of the offer of Dr. Lewis, even though it never reached Dr. Lewis.

Decision

The general rule is that an offer made by a letter or telegram may be accepted in the same manner. In either case, the posting of the letter or the dispatch of the telegram is regarded as the act of acceptance, and it is not material that the acceptance is lost in transmission. However, it is always the privilege of the one making the offer, to require an actual receipt of the acceptance before the contract is complete. If he does this, then it is the misfortune of the acceptor that his message of acceptance is lost. Thus, in this case, no contract for a new lease was ever made, because an actual receipt of the acceptance was specified, and the requirement was never met by Browning.

Mr. Chief Justice Gray said: "A person making an offer may always, if he chooses, make the formation of the contract, which he proposes, dependent upon the actual communication to himself of the acceptance".

The court held that the suit was properly brought upon the old lease, and that judgment must be given for Helen Lewis.

Ruling Law. Story Case Answer

When the law discussed in the previous section is first considered, it seems harsh and unfair to the person making the offer. But when taken in connection with the law in this section the injustice is more apparent than real, because it is always within the power of the person making the offer to require actual receipt of the acceptance. It has been observed heretofore, that the person making the offer, may make it on such terms as please him; consequently, he may stipulate that there will be no contract unless the acceptance is actually received. If he does this, the contract is not complete until he in fact receives the letter or telegram, of acceptance. Furthermore, if the letter or telegram is lost, then no contract results. Thus, in the Story Case, Bonham made such a stipulation. The letter was lost through no fault of either party. Nevertheless, no contract resulted; and on the 30th, Bonham was at liberty to dispose of the buggy as he pleased. Judgment, therefore, should be given for Bonham.