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3.3 Indefinite Contracts
  • 1 3.3.1.1 Indefinite Contracts Introduction

    1

    "It is a commonplace of the law," Williston informs us, "that mutual assent is necessary for the formation of contracts, at least unless they are under seal." Mutual Assent in the Formation of Contracts, 14 Ill. L. Rev. 85, 85 (1919). There is no contract without assent. But once the objective manifestations of assent are present, their author is bound, even if he did not read the contract or understand the meaning of its terms. Cf. Restatement Second §26. Otherwise, to paraphrase Holmes, no rational theory of contract can be constructed. And, to paraphrase Corbin, since a court cannot enforce an agreement without knowing what the agreement is, its terms must be certain or at least susceptible of being made certain. 1 Corbin §95 (1963 & Supp. 1984). An agreement, therefore, by the parties"to enter into negotiations, and agree upon the terms of a contract, if they can, cannot be made the basis of a cause of action." Shepard v. Carpenter 54 Minn. 153, 156, 55 N.W. 906, 906 (1893). In their search for an agreement, the courts habitually use an offer and acceptance approach. This assumes that every contract can be analyzed into offer and acceptance. On this view, an agreement is said to be made when one party accepts an offer made by the other party. Restatement Second §§22, 23. The first step is to determine the addressee of the offer and to find out whether he communicated an acceptance that matches the offer. Within the framework of this analysis, it is quite important to determine whether the person who took the initiative "really" made an offer or merely invited the other party to make an offer, so that what looks like an acceptance is in reality an offer which itself needs an acceptance. Restatement Second §§24, 26, 33, 50. It is the purpose of this and several other sections to test the range of these statements.

    2

    Anxious not to incur the reproach of being a destroyer of bargains, modern contract law has abandoned the idea advanced during the last century that a contract presupposes a meeting of minds in full and final agreement, a consensus of mind. All that is required is the mutual. manifestation of assent. The law, furthermore, permits the parties to keep the arrangement flexible[39] and takes into account that businessmen often "record the most important agreements in crude and summary fashion. Hillas & Co. v. Arcos, Ltd., 147 L.T.R. (n.s.) 503, 514 (H.L. 1932). In consummating a contract, parties frequently do not make express provision for all its essential terms. Without stating so explicitly, they often expect that the express terms of their contract are to be supplemented by terms based on the "surrounding circumstances." This is particularly true in fields that are governed by trade custom and usage. In general, courts have been well aware of this way of doing business and, on the whole, they have successfully carried out the intention of the parties with the help of the device of "interpretation." Upon being satisfied that an agreement was intended or that one party justifiably relied on the deal and the other party ought to have known that he would so rely, the courts have been ready to supply missing terms and to give concrete meaning to indefinite terms, provided (it is often said), that objective criteria for establishing terms are available in the agreement itself, or that such terms can be inferred from a prior or subsequent course of dealing, or accepted business practices. To be sure, the mere fact that the parties thought they had a contract is not enough to turn an agreement utterly lacking in definiteness into a contract, but before courts are ready to strike down a bargain, "indefiniteness must reach the point where construction becomes futile." Cohen & Sons, Inc. v. Lurie Woolen Co., 232 N.Y. 112, 114, 133 N.E. 370, 371 (1921).

    3

    Before courts take this step, however, and abandon hope of discovering the intentions of the parties, they frequently resort to using the “hypothetical intentions" of the parties, if this technique of filling gaps and preserving the contract can be reconciled with notions of fairness and justice. This is particularly true for long-term contracts where the parties have it. In the language of L. Hand, J., “[a]s courts become increasingly sure of themselves, interpretation more and more involves imagination protection of the express purpose upon situations for which the parties did not provide and which they did not have in mind.”[40]

    4

    The attitude of modern law was anticipated if not reflected in a passage written by Corbin more than fifty years ago:

    5

    The legal relations consequent upon offer and acceptance are not wholly dependent, even upon the reasonable meaning of the words and acts of the parties. The law determines these relations in the light of subsequent circumstances, these often being totally unforeseen by the parties. In such cases it is sometimes said that the law will create that relation which the parties would have intended had they foreseen. The fact is, however, that the decision will depend upon the notions of the court as to policy, welfare, justice, right and wrong, such notions often being inarticulate and subconscious.[41]

    6

    Both the Uniform Commercial Code and the Restatement Second have attempted to consolidate the gains made by progressive case law towards flexibility and fairness. See U.C.C. §§1-201(3), 1-205, 2-204, 2-207, 2-208, 2-305. For parallel and more elaborate provisions of the Restatement Second, see §§22, 33, 34, 202, 204, 205, 221, 362.

    7

    The attitude with regard to the offer and acceptance paradigm is reflected in U.C.C. §2-204, which reads as follows:

    8

    (1) A contract for sale of goods may be made in any manner sufficient to the show agreement, including conduct by both parties which recognizes the existence of such a contract.

    (2) An agreement sufficient to constitute a contract for sale may be found even though the movement of its making is undetermined.

    (3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.[42]

    9

    Subsection 3 has found further elaboration in U.C.C. §2-305, dealing with open-price of terms.[43]

    10

    Section 204 of the Restatement Second contains a parallel provision. It provides that when the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term that is essential to a determination of their rights and duties, the court will supply a term that is reasonable in the circumstances. See further §§33, 34, which deal with the requirement of certainty.[44]

    11

    For a criticism of U.C.C. §2-204(3), see Williston, The Law of Sales in the Proposed Uniform Commercial Code, 63 Harv. L. Rev. 561, 576 (1950), advocating that the rule should be limited to the omission of "minor" terms: "If the parties choose to leave important terms open and nevertheless 'intend a contract' I think their only reliance should be on business honor." This position has been rejected in Pennsylvania Co. v. Wilmington Trust Co., 39 Del. Ch. 453, 166 A.2d 63 (1960); aff'd, 40 Del. Ch. 140, 172 A.2d 63 (1961), a bill for specific performance by plaintiff-buyer against the trustee-seller of corporate stock. Motions of both parties for summary judgment were denied by the chancellor since the submitted writings did not clearly show intention to contract. The decision was affirmed by the higher court. Since both courts indicated that the question of intention was a triable fact, the defendant settled with the plaintiff. But the defendant was later held liable to the beneficiaries of the trust for the amount of the settlement. Wilmington Trust Co. v. Coulter, 40 Del. Ch. 548, 260 A.2d 441 (1964). We owe this reference to Knapp, Enforcing a Contract to Bargain, 44 N.Y.U. L. Rev. 673, 718 n.159 (1969). U.C.C. §2-204 and its comment were the basis of the decision in the Pennsylvania Co. case. The comment to subsection (3) is worth reading:

    12

    Subsection (3) states the principle as to "open terms" underlying later sections of the Article. If the parties intend to enter into a binding agreement, this subsection recognizes that agreement is valid in law, despite missing terms, if there is any reasonably certain basis for granting a remedy. The test is not certainty as to what the parties were to do nor as to the exact amount of damages due the plaintiff. Nor is the fact that one or more terms are left to be agreed upon enough of itself to defeat an otherwise adequate agreement. Rather, commercial standards on the point of "indefiniteness" are intended to be applied, this Act making provision elsewhere for missing terms needed for performance, open price, remedies and the like.

    13

    Furthermore, an agreement of the parties to reduce their formal understanding to a writing does not necessarily mean that until this has been done either party can back out with impunity. The writing envisaged may, according to the intention of the parties as interpreted, constitute a mere memorial whose absence will not prevent the formation of a contract. Restatement Second §27. Llewellyn, Our Case-Law of Contracts (pt. 1), Offer and Acceptance, 48 Yale L.J. 1, 30-40 (1938).

    14

    [39] On flexible pricing, see U.C.C. §2-305, infra p. 182.

    15

    [40] But, the sentence immediately following ends on a note of caution. "Out of the rivers of ink that have been spilled upon that subject I know nothing that has emerged which enlightens us beyond the caution that departure from the text — necessary as it is — must always be made with circumspection;" L. Hand dissenting in L. N. P. Jackson & Co. v. Royal Norwegian Government, 177 F.2d 694, 702 (2d Cir. 1949).  See further the discussion in E. Farnsworth, Contracts 7, 16 (1982) (In long-term contracts, unforeseeability is endemic).

    16

    [41] Corbin, Offer and Acceptance, and Some of the resulting Legal Relations, 26 Yale L.J. 169, 206 (1917); Atiyah, Contract and Fair Exchange, 35 U. Toronto L.J. (1985).

    17

    [42] See Restatement Second §§22, 23, 33, 34, 362.  The requirement of certainty laid down in §33 “may be affected by the dispute which arises and by the remedy sought” as Comment 6 points out.  Section 34 deals with certainty and choice of terms and effect of performance or reliance.

    18

    [43] Section 2-305 reads as follows:

    19

    (1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if

    (a) nothing is said as to price; or

    (b) the price is left to be agreed by the parties and they fail to agree; or

    (c) The price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

    (2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

    (3)  When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.

    (4) Where, however, the parties intended not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

    20

    [44] For the rationale behind the U.C.C. rule, see E. Farnsworth, Contracts 202-204 (1982). Should it be extended by analogy? To a renewal option in a lease? Consult Joseph Martin, Inc. Delicatessen v. Schumacher, 52 Misc. 2d 105, 436 N.Y.S.2d 247, 417 N.E.2d 541 (1982).

  • 2 3.3.2.1 Young and Ashburnham's Case

    1
    For a report of the case, see p. 146 supra.
  • 3 3.3.3.1 Lefkowitz v. Great Minneapolis Surplus Store, Inc.

    1
    251 Minn. 188 (1957)
    2
    86 N.W. (2d) 689
    3
    MORRIS LEFKOWITZ
    v.
    GREAT MINNEAPOLIS SURPLUS STORE, INC.
    4
    No. 37,220.
    Supreme Court of Minnesota.
    5
    December 20, 1957.
    6

    [189] Louis F. Davis, for appellant.

    7

    Morris Lefkowitz, pro se, for respondent.

    8

    MURPHY, JUSTICE.

    9

    This is an appeal from an order of the Municipal Court of Minneapolis denying the motion of the defendant for amended findings of fact, or, in the alternative, for a new trial. The order for judgment awarded the plaintiff the sum of $138.50 as damages for breach of contract.

    10

    This case grows out of the alleged refusal of the defendant to sell to the plaintiff a certain fur piece which it had offered for sale in a newspaper advertisement. It appears from the record that on April 6, 1956, the defendant published the following advertisement in a Minneapolis newspaper:

    11

    "SATURDAY 9 A.M. SHARP

    3 BRAND NEW

    FUR COATS

    Worth to $100.00

    First Come

    First Served

    $1

    EACH"

    12

    On April 13, the defendant again published an advertisement in the same newspaper as follows:

    13

    "SATURDAY 9 A.M.

    2 BRAND NEW PASTEL 

    MINK 3-SKIN SCARFS

    Selling for $89.50

    Out they go

    Saturday. Each ......... $1.00

    1 BLACK LAPIN STOLE

    Beautiful,

    worth $139.50 .......... $1.00

    FIRST COME

    FIRST SERVED"

    14

    [190] The record supports the findings of the court that on each of the Saturdays following the publication of the above-described ads the plaintiff was the first to present himself at the appropriate counter in the defendant's store and on each occasion demanded the coat and the stole so advertised and indicated his readiness to pay the sale price of $1. On both occasions, the defendant refused to sell the merchandise to the plaintiff, stating on the first occasion that by a "house rule" the offer was intended for women only and sales would not be made to men, and on the second visit that plaintiff knew defendant's house rules.

    15

    The trial court properly disallowed plaintiff's claim for the value of the fur coats since the value of these articles was speculative and uncertain. The only evidence of value was the advertisement itself to the effect that the coats were "Worth to $100.00," how much less being speculative especially in view of the price for which they were offered for sale. With reference to the offer of the defendant on April 13, 1956, to sell the "1 BLACK LAPIN STOLE * * * worth $139.50 * * *" the trial court held that the value of this article was established and granted judgment in favor of the plaintiff for that amount less the $1 quoted purchase price.

    16

    1. The defendant contends that a newspaper advertisement offering items of merchandise for sale at a named price is a "unilateral offer" which may be withdrawn without notice. He relies upon authorities which hold that, where an advertiser publishes in a newspaper that he has a certain quantity or quality of goods which he wants to dispose of at certain prices and on certain terms, such advertisements are not offers which become contracts as soon as any person to whose notice they may come signifies his acceptance by notifying the other that he will take a certain quantity of them. Such advertisements have been construed as an invitation for an offer of sale on the terms stated, which offer, when received, may be accepted or rejected and which therefore does not become a contract of sale until accepted by the seller; and until a contract has been so made, the seller may modify or revoke such prices or terms. Montgomery Ward & Co. v. Johnson, 209 Mass. 89, 95 N.E. 290; Nickel v. Theresa Farmers Co-op. Assn. 247 Wis. 412, 20 N.W. (2d) 117; Lovett v. Frederick Loeser & Co. Inc. 124 Misc. 81, 207 N.Y.S. 753; Schenectady Stove Co. v. Holbrook, [191] 101 N.Y. 45, 4 N.E. 4; Georgian Co. v. Bloom, 27 Ga. App. 468, 108 S.E. 813; Craft v. Elder & Johnston Co. 34 Ohio L.A. 603, 38 N.E. (2d) 416; Annotation, 157 A.L.R. 746.

    17

    The defendant relies principally on Craft v. Elder & Johnston Co. supra. In that case, the court discussed the legal effect of an advertisement offering for sale, as a one-day special, an electric sewing machine at a named price. The view was expressed that the advertisement was (34 Ohio L.A. 605, 38 N.E. [2d] 417) "not an offer made to any specific person but was made to the public generally. Thereby it would be properly designated as a unilateral offer and not being supported by any consideration could be withdrawn at will and without notice." It is true that such an offer may be withdrawn before acceptance. Since all offers are by their nature unilateral because they are necessarily made by one party or on one side in the negotation of a contract, the distinction made in that decision between a unilateral offer and a unilateral contract is not clear. On the facts before us we are concerned with whether the advertisement constituted an offer, and, if so, whether the plaintiff's conduct constituted an acceptance.

    18

    There are numerous authorities which hold that a particular advertisement in a newspaper or circular letter relating to a sale of articles may be construed by the court as constituting an offer, acceptance of which would complete a contract. J.E. Pinkham Lbr. Co. v. C.W. Griffin & Co. 212 Ala. 341, 102 So. 689; Seymour v. Armstrong & Kassebaum, 62 Kan. 720, 64 P. 612; Payne v. Lautz Bros. & Co. 166 N.Y.S. 844, affirmed, 168 N.Y.S. 369, affirmed, 185 App. Div. 904, 171 N.Y.S. 1094; Arnold v. Phillips, 1 Ohio Dec. (Reprint) 195, 3 Western L.J. 448; Oliver v. Henley (Tex. Civ. App.) 21 S.W. (2d) 576; Annotation, 157 A.L.R. 744, 746.

    19

    The test of whether a binding obligation may originate in advertisements addressed to the general public is "whether the facts show that some performance was promised in positive terms in return for something requested." 1 Williston, Contracts (Rev. ed.) § 27.

    20

    The authorities above cited emphasize that, where the offer is clear, definite, and explicit, and leaves nothing open for negotiation, it constitutes an offer, acceptance of which will complete the contract. The most recent case on the subject is Johnson v. Capital City Ford Co. [192] (La. App.) 85 So. (2d) 75, in which the court pointed out that a newspaper advertisement relating to the purchase and sale of automobiles may constitute an offer, acceptance of which will consummate a contract and create an obligation in the offeror to perform according to the terms of the published offer.

    21

    Whether in any individual instance a newspaper advertisement is an offer rather than an invitation to make an offer depends on the legal intention of the parties and the surrounding circumstances. Annotation, 157 A.L.R. 744, 751; 77 C.J.S., Sales, § 25b; 17 C.J.S., Contracts, § 389. We are of the view on the facts before us that the offer by the defendant of the sale of the Lapin fur was clear, definite, and explicit, and left nothing open for negotiation. The plaintiff having successfully managed to be the first one to appear at the seller's place of business to be served, as requested by the advertisement, and having offered the stated purchase price of the article, he was entitled to performance on the part of the defendant. We think the trial court was correct in holding that there was in the conduct of the parties a sufficient mutuality of obligation to constitute a contract of sale.

    22

    2. The defendant contends that the offer was modified by a "house rule" to the effect that only women were qualified to receive the bargains advertised. The advertisement contained no such restriction. This objection may be disposed of briefly by stating that, while an advertiser has the right at any time before acceptance to modify his offer, he does not have the right, after acceptance, to impose new or arbitrary conditions not contained in the published offer. Payne v. Lautz Bros. & Co. 166 N.Y.S. 844, 848; Mooney v. Daily News Co. 116 Minn. 212, 133 N.W. 573, 37 L.R.A. (N.S.) 183.

    23

    Affirmed.

  • 4 3.3.3.2 Notes - Lefkowitz v. Great Minneapolis Surplus Store, Inc.

    1

    NOTE

    2

    Consult 56 Mich. L. Rev. 1016. On bait advertising, see 69 Yale L.J. 830 (1960); see further New York General Business Law ch. 22-A.

    3

    A sees in the display window of a shop an article marked $5. When he asks for it, the shopkeeper realizes that the wrong price tag has been affixed and that the article should have been marked $15. He refuses to sell the article for $5. Is he bound? No, according to Professor Winfield, commenting on the South African case of Crawley v. Rex, [1909] Transvaal L.R. 1005. Some Aspects of Offer and Acceptance, 55 L.Q. Rev. 499, 516-518 (1939): "a shop is a place for bargaining and not for compulsory sales." See further, Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd., (1953) 1 Q.B. 401; Kahn, Some Mysteries of Offer and Acceptance, 72 S.A.L.J. 246, 251 (1955).

    4

    A newspaper invites its readers to submit letters on matters of public interest to its letters-to-the-editor column. A reader sends in a signed letter on a campaign issue, giving his address. Is the paper in breach of contract if it refuses to publish it? Wall v. World Pub. Co., 263 P.2d 1010 (Okla. 1953).

    5

    On sales by auction, see, U.C.C. §2-328.

  • 5 3.3.4.1 Jenkins Towel Service, Inc. v. Fidelity-Philadelphia Trust Co.

    1
    400 Pa. 98 (1960)
    2
    Jenkins Towel Service, Inc., Appellant,
    v.
    Fidelity-Philadelphia Trust Company.
    3

    Supreme Court of Pennsylvania.

    4
    Argued April 21, 1960.
    5
    June 3, 1960.
    6

     

    7

    [99] Before JONES, C.J., BELL, MUSMANNO, JONES, COHEN and EAGEN, JJ.

    8

    Samuel Kagle, for appellant.

    9

    Thomas M. Thistle, with him Ralph Earle, II, and Smyth, Straub & Thistle, and Morgan, Lewis & Bockius, for appellees.

    10

    OPINION BY MR. JUSTICE BELL, June 3, 1960:

    11

    Plaintiffs filed a complaint in equity seeking (1) specific performance of an alleged agreement to sell real estate and (2) an injunction restraining the defendants from seeking a change in the zoning to permit the erection of a gasoline station. The lower Court sustained preliminary objections and entered an Order dismissing the amended complaint.

    12

    Fidelity-Philadelphia Trust Company owned, as trustee,[*] the properties in question. Plaintiff averred in its amended complaint:

    13

    "12. Since 1956 the financial condition of the trust of which said real estate was a part, which Fidelity administered, was in acute need of cash and income to carry out the trust purpose, and it was deemed necessary [100] and practicable to sell said real estate as it did not produce sufficient income.

    14

    "13. As a consequence, on March 19, 1956, Fidelity offered said properties at public aution, but the properties were withdrawn because the bids were inadequate.

    15

    "14. Since March 1956 said properties were offered on the real estate market and plaintiff, Esso, and other parties separately carried on negotiations, and as a consequence, the sale price was progressively increased.

    16

    "15. During April 1959 Fidelity offered said real estate to plaintiff for $85,000.00 and plaintiff's counteroffer of $82,500.00 was declined.

    17

    "16. During June 1959 the financial conditions of said trust became so acute and the need of cash to carry out the trust purposes became so great that Fidelity and its co-trustee or trustees whose identity is presently unknown to plaintiff, decided and agreed to abandon further preliminary negotiations with the interested parties and to sell the properties to the party who submitted the highest acceptable cash bid in excess of $92,000.00.

    18

    "17. On June 18, 1959, pursuant to said decision to sell, as set forth in the preceding paragraph, defendant Fidelity, in order to give each and every prospective purchaser a fair and equal chance and in order to secure the highest and best price for the owner, asked for sealed bids."

    19

    Plaintiff then averred that the Fidelity submitted a written offer to plaintiff and others as per the following letter:

    20

    "June 18, 1959

    21

    "Jenkins Towel Service, Inc.

    22

    "Attention: Mr. James E. Mitchell, Vice President

    23

    "Dear Mr. Mitchell:

    24

    "We wish to acknowledge your letter of recent date submitting an offer for the purchase of the group of [101] properties situate and known as `241-47 North 11th Street, 1030-32 Vine Street, and 1018-22 Vine Street', Philadelphia, Pa.

    25

    "As you already know, several offers have been submitted for the purchase of these properties which offers are approximately of the same amount and on the same terms and conditions. The Fidelity-Philadelphia Trust Company is acting in a fiduciary capacity in the management of these properties and is, of course, obligated to recommend the offer which it believes most advantageous to its Estate.

    26

    "In order to give each and every prospect a fair and equal chance and in order to secure the highest and best price for the Estate which it represents it has been decided to ask for sealed bids from all interested parties. It is suggested, therefore, that you forward to this office on or before Wednesday, June 24, 1959, your highest offer for the properties. At that time the bids will be opened and an Agreement of Sale tendered to the highest acceptable bidder provided the offer is in excess of $92,000 cash, free and clear of any and all brokerage commissions. All offers must be on an all cash basis and must be accompanied by a check to the order of the Fidelity-Philadelphia Trust Company, Trustee, in the amount of at least 10% of the offer. The Agreement of Sale will provide for the equal division of all Realty Transfer Taxes between buyer and seller. The Agreement of sale shall also contain a provision that the Vendee or purchaser has not been interested in the property through any real estate broker or attorney and that no commission is therefore due by the Vendor to anyone. Further, that if any claim is filed for a commission by any broker or attorney, the Vendee or purchaser is to assume full responsibility therefor. The Trustees of course, reserve the right to approve or disapprove of any and all offers, or to withdraw the properties from the market.

    27

    [102] "In submitting your bid please note on the envelope containing the bid and check `Sealed bid — June 24, 1959' and direct the bid to the undersigned.

    28

    "If you desire any further information or if we can be of any assistance please do not hesitate to call upon us.

    29

    Very truly yours, George Butterworth, Jr. Assistant Vice President."

    30

    Plaintiff further averred that on June 24, 1959, plaintiff submitted a sealed bid for said properties in the sum of $95,600 cash, accompanied by a treasurer's check in the sum of $10,000; that when the bids were opened only plaintiff and Esso Standard Oil Company submitted a bid; that plaintiff and defendant each bid the sum of $95,600, but that the bid of plaintiff was unconditional in all respects and complied fully with all the requirements of the offer as set forth in Fidelity's letter, but the bid of Esso Standard Oil Company was conditional and qualified in that it stipulated that its offer to purchase was subject to approval of its home office in New York and also to the approval of zoning authorities to permit the use of these properties as a gasoline station in an area which was zoned "C" Commercial.

    31

    On July 3, 1959 plaintiff requested Fidelity to enter into an agreement of sale under and in accordance with the terms set forth in its letter of June 18, but on July 9, 1959 Fidelity refused to do so. Plaintiff further averred that on July 31, 1959 one of the defendants, Pottash, filed an application with the Zoning Bureau of Philadelphia for a permit to demolish existing buildings and to erect a modern gasoline station on the properties in question. The Plan attached to this application bears the following legend: "Esso Standard Oil Co., City Line Ave. and Esso Road, Bala-Cynwyd, [103] Pa." This application was denied by the Zoning Bureau, whereupon Pottash appealed to the Zoning Board of Adjustment. Plaintiff further averred that "said Pottash is acting as agent for Esso and that Esso is endeavoring to obtain the zoning permit to erect a gasoline station pursuant to an agreement between Esso and Fidelity (whereunder Fidelity will sell said real estate to Esso), all of which is in derogation of plaintiff's legal and equitable rights in the premises."

    32

    The rights of the parties depend upon the proper construction of Fidelity's letter of June 18, 1959. Plaintiff claims the letter was an offer, which it unconditionally accepted. Defendants claim that the letter was merely "preliminary negotiations" and "an invitation to bid."

    33

    Fidelity's letter of June 18 is ambiguous and therefore it must be interpreted most strongly against the Fidelity, which drew it: Betterman v. American Stores Co., 367 Pa. 193, 80 A. 2d 66. In that case the Court said (pages 203-204):

    34

    ". . . If, therefore, the contract, or any part of it, is susceptible of two reasonable constructions, `It is an elementary proposition that a written contract should, in case of doubt, be interpreted against the party who has drawn it; 6 R.C.L. page 854, Sec. 242; White vs. Smith, 33 Pa. 186.' Hempfield Township School District vs. Cavalier, 309 Pa. 460, 463, 164 A. 602.

    35

    "`. . . "Contracts must receive a reasonable interpretation, according to the intention of the parties.. . . if that intention can be ascertained from their language."' Brown vs. Raub, 357 Pa. 271, 287, 54 A. 2d 35.

    36

    "`". . . in order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject-matter of the agreement": Slonaker v. P.G. [104] Publishing Co., 338 Pa. 292, 296, 13 A. 2d 48, 50, 51.' Hindman v. Farren, 353 Pa. 33, 35, 44 A. 2d 241."

    37

    In Smith-Faris Co. v. Jameson Hospital Association et al., 313 Pa. 254, 169 Atl. 233, the Court said (page 260): "`The proper construction of a contract is not dependent upon any name given it by the parties, or upon any one provision, but upon the entire body of the contract and its legal effect as a whole': 6 R.C.L., page 836, section 226."

    38

    Plaintiff's sealed bid of $95,600 was unequivocal, unconditional, and in full compliance with all the terms and conditions set forth by the Fidelity in its letter-offer dated June 18, 1959. On the other hand the bid of Esso Standard Oil Company was conditional and qualified. Esso's bid was not an acceptance of the offer made by Fidelity; on the contrary it was a rejection of this offer and a counter-offer. Restatement, Contracts, § 60, and particularly comment a; § 27, Illustration 3. It is clear that plaintiff was the only party which accepted the Fidelity's offer.

    39

    If, as defendants contend, Fidelity's letter of June 18 was merely an invitation to prospective purchasers who had been negotiating unsuccessfully for several years to submit a higher bid or offer which it could accept or reject in its sole and arbitrary discretion, why did Fidelity ask for "sealed bids" from all interested parties on or before June 24, 1959, and further state "at that time the bids will be opened and an Agreement of Sale tendered[*] to the highest acceptable bidder, provided the offer is in excess of $92,000 cash, free and clear of all brokerage commissions," and then specify in detail the other provisions which were to be incorporated in the agreement of sale? On its face, and especially in the light of the prior negotiations, the surrounding circumstances and the objects which [105] the parties apparently had in view, the contention of defendants that this was merely an invitation to bid, which Fidelity could reject in its unfettered discretion, is unreasonable.

    40

    In an attempt to support Fidelity's construction and position, defendants have overlooked not only the law as to the interpretation of a contract which must be considered in its entirety, but also the most important provision, viz. that after the bids are opened it will tender to the highest acceptable bidder[**] an agreement of sale, the details of which are set forth in Fidelity's letter of June 18.

    41

    Defendants rely upon the statement in Fidelity's letter that it was acting as fiduciary and was "obligated to recommend the offer which it believed most advantageous to its estate." This contention is devoid of merit. Plaintiff unconditionally and unqualifiedly accepted all the terms and conditions of Fidelity's offer, and no other party did; and there was no higher or more advantageous offer. Defendants also rely upon the following sentence — "The Trustees, of course, reserve the right to approve or disapprove of any and all offers, or to withdraw the properties from the market." This sentence standing alone is what creates a possible ambiguity. This sentence must be interpreted, we repeat, by considering the surrounding circumstances, the objects Fidelity apparently had in view, and the contract in its entirety, and if there is any ambiguity which is reasonably susceptible of two interpretations, the ambiguity must be resolved against the Fidelity which drew the letter-offer. So interpreted, we believe the sentence means that Fidelity can withdraw the properties from the market at any time before the opening of the sealed bids, and can approve or disapprove any offer which does not fully comply with all the [106] conditions set forth by the Fidelity, or which complies but adds unsatisfactory terms.

    42

    Appellee and the Court below rely upon Hilliard Estate, 383 Pa. 63, 117 A. 2d 728, where a corporate executor accepted a subsequent and higher bid. That case is clearly distinguishable. In that case the executor's letter stated "all offers are subject to the approval of the co-executors." (1) Appellant's offer was not accepted by the co-executors and (2) there was no subsequent or higher bid in the instant case. As the Court said (page 66): "The circular letter, however, unequivocally stipulated that all offers were subject to the approval of the co-executors . . . Therefore the circular letter merely constituted an invitation to bid."

    43

    We are convinced that the letter of Fidelity Trust Company dated June 18, 1959, was an offer of sale of the properties in question by Fidelity, subject to the terms and conditions therein set forth and that the offer was duly and unconditionally accepted by plaintiff alone. The Court below therefore erred in sustaining the defendants' preliminary objections and in dismissing plaintiff's amended bill of complaint. If the defendants are unable to controvert the facts set forth in the amended complaint, the plaintiff should be awarded specific performance of the contract.

    44

    Decree reversed with a procedendo at the cost of the trust estate of which Fidelity-Philadelphia Trust Company is trustee or co-trustee.

    45

    DISSENTING OPINION BY MR. JUSTICE BENJAMIN R. JONES:

    46

    The crux of my disagreement with the majority of this Court lies in the interpretation of the letter of June 18, 1959 from Fidelity to Jenkins. The majority construes this letter as a firm offer on the part of [107] Fidelity to sell this real estate to the highest bidder, whereas I construe this letter as an invitation for an offer to be submitted to purchase this real estate.

    47

    Fidelity held title to this property as a fiduciary: such fact, known to Jenkins, required that in the disposal of such property Fidelity exercise a high degree of care: Herbert Estate, 356 Pa. 107, 110, 51 A. 2d 753. In recognition of its fiduciary duty, Fidelity warned Jenkins that, as a fiduciary, it was "obligated to recommend the offer which it believes most advantageous to its Estate". (Emphasis added).

    48

    Four different times the letter employs the words "offer" or "offers" to describe that which Jenkins is to submit. The letter requests the addressee to "forward your highest offer"; it states that all "offers" were to be made on a cash basis: it directs that a check should accompany the offer "in the amount of at least 10% of the offer"; lastly, Fidelity reserved the right to approve or disapprove of "any or all offers".

    49

    The majority bases its interpretation of the letter as an "offer" on two facets of its language: first, the letter asks for "sealed bids" and, second, the letter states that "at that time [June 24, 1959] the bids will be opened and an Agreement of Sale tendered". A "sealed bid" is simply an "offer" or a "bid" submitted in such form that its contents are concealed until the time of opening, a cautionary measure which insures to bidders an equality of treatment at the hands of the person who invites such offers or bids. The mere fact that a "bid" is sealed does not determine whether the bid is an "offer" of "an acceptance or an offer". The employment of the word "sealed" adds no magic to the situation.

    50

    Had the letter stated an "Agreement of Sale [will be] tendered to the highest bidder" the majority view might be supportable, but the majority overlooks an [108] all-important word in the phrase actually employed, i.e., the word "acceptable". An Agreement of Sale was not to be tendered to "the highest bidder", but to "the highest acceptable bidder". The word "acceptable" certainly and clearly modifies the word "highest" and reveals a clear intent on the part of Fidelity that an agreement of sale will be tendered to the highest bidder only if such bidder is "acceptable". This phrase does support not the majority, but my view that Fidelity reserved the right of rejection of any bid that was not acceptable to it.

    51

    Finally, Fidelity's letter expressly states: "The Trustees, of course, reserve the right to approve or disapprove of any or all offers, or to withdraw the properties from the market". The majority states that this "sentence means that Fidelity can withdraw the properties from the market at any time before the opening of the sealed bids, and can approve or disapprove any offer which does not fully comply with all the conditions set forth by Fidelity, or which complies but adds unsatisfactory terms". Such a construction is absolutely unjustified under the clear language employed by Fidelity. If a bid did not fully comply with the terms of the letter, or, if it complied, but added any terms, whether satisfactory or unsatisfactory, such a bid, even if called an "acceptance", would not constitute an acceptance to any offer contained in the letter. As to the interpretation by the majority that Fidelity's right to withdraw ceased at the time the sealed bids were opened, such a construction rewrites the language of the letter and imposes on Fidelity's part a condition judge-created and not Fidelity intended and expressed.

    52

    If the English language ever was effectively employed to express a fiduciary's reservation of the right to reject any and all bids it appears in this letter. Fundamental concepts inherent in the law of contracts [109] should not be lightly cast aside for the sake of expediency in the determination of a particular case. Instead of construing this letter as written, the majority, under the guise of a supposed ambiguity of language, now undertakes to rewrite the letter and to create a contract where no contract exists.

    53

    I, accordingly, dissent.

    54

    [*] The name of the estate or the person for whom the Fidelity held the properties was not disclosed.

    55

    [*] Italics throughout, ours.

    56

    [**] There is no contention that plaintiff was not acceptable.

  • 6 3.3.4.2 Notes - Jenkins Towel Service, Inc. v. Fidelity-Philadelphia Trust Co.

    1

    NOTE

    2

    Besides the Trust Co., defendants included Esso and an agent of Esso. In addition to specific performance, plaintiff prayed for an injunction restraining the defendants from seeking a change in the zoning to permit the erection of a gasoline station.

  • 7 3.3.5.1 Moulton vs. Kershaw

    1

    59 Wis. 316, 18 N.W. 172 (1884)

    2
    MOULTON
    vs.
    KERSHAW and another
    3

    Supreme Court of Wisconsin.
    January 8, 1884.

    4

    APPEAL from the Circuit Court for Milwaukee County. The case is thus stated by Mr. Justice TAYLOR: "The complaint alleges that the defendants were dealers in salt in the city of Milwaukee, including salt of the Michigan Salt Association; that the plaintiff was a dealer in salt in the city of La Crosse, and accustomed to buy salt in large quantities, which fact was known to the defendants', that on the 19th day of September, 1882, the defendants, at Milwaukee, wrote and posted to the plaintiff at La Crosse a letter, of which the following is a copy:

    5

    "'MILWAUKEE, September 19, 1882.

    6

    "'J. E. Moulton, Esq., La Crosse, Wis.— DEAR SIR: In consequence of a rupture in the salt trade, we are authorized to offer Michigan fine salt, in full car-load lots of eighty to ninety-five bbls., delivered at your city, at 85c. per bbl., to be shipped per C. & N. W. R. R. Co. only. At this price it is a bargain, as the price in general remains unchanged. Shall be pleased to receive your order.

    7

    "'Yours truly, C. J. KERSHAW & Son.'

    8

    "The balance of the complaint reads as follows: 'And this plaintiff alleges, upon information and belief, that said defendants did not send said letter and offer by authority of, or as agents of, the Michigan Salt Association, or any other party, but on their own responsibility. And the plaintiff further shows that he received said letter in due course of mail, to wit, on the 20th day of September, 1882, and that he, on that day, accepted the offer in said letter contained, to the amount of two thousand barrels of salt therein named, and immediately, and on said day, sent to said defendants at Milwaukee a message by telegraph, as follows:

    9

    "'LA CROSSE, September 20, 1882.

    10

    "'To C. J. Kershaw & Son, Milwaukee, Wis.: Your letter of yesterday received and noted. You may ship me two thousand (2,000) barrels Michigan fine salt, as offered in your letter. Answer. J. H. MOULTON.'

    11

    "'That said telegraphic acceptance and order was duly received by said defendants on the 20th day of September, 1882, aforesaid; that two thousand barrels of said salt was a reasonable quantity for this plaintiff to order in response to said offer, and not in excess of the amount which the defendants, from their knowledge of the business of the plaintiff, might reasonably expect him to order in response thereto.

    12

    "'That although said defendants received said acceptance and order of this plaintiff on said 20th day of September, 1882, they attempted, on the 21st day of September, 1882, to withdraw the offer contained in their said letter of September 19, 1882, and did, on said 21st day of September, 1882, notify this plaintiff of the withdrawal of said offer on their part; that this plaintiff thereupon demanded of the defendants the delivery to him of two thousand barrels of Michigan fine salt, in accordance with the terms of said offer, accepted by this plaintiff as aforesaid, and offered to pay them therefor in accordance with said terms, and this plaintiff was ready to accept said two thousand barrels, and ready to pay therefor in accordance with said terms. Nevertheless, the defendants utterly refused to deliver the same, or any part thereof, by reason whereof this plaintiff sustained damage to the amount of eight hundred dollars.

    13

    "'Wherefore the plaintiff demands judgment against the defendants for the sum of eight hundred dollars, with interest from the 21st day of September, 1882, besides the costs of this action.'

    14

    "To this complaint the defendants interposed a general demurrer. The circuit court overruled the demurrer, and from the order overruling the same the defendants appeal to this court."

    15

    Benj. K. Miller, of counsel, for the appellants, cited: 1 Parsons on Con. (1857), 400; 1 Wharton on Con., 43, sec. 18; Anson on Con. (2d Eng. ed.), 15, 23; 1 Addison on Con. (3d Am. ed.), par. 20 ad fin.; Beaupre v. P. & A. Tel. Co., 21 Minn., 155; Kinghorne v. Montreal Tel. Co., U. C. 18 Q. B., 60; S. C., Allen's Tel. Cas., 98; Lyman v. Robinson, 14 Allen, 254; Ridgeway v. Wharton, 6 H. L. Cas., 304; Sourwine v. Truscott, 17 Hun, 432; Greve v. Ganger, 36 Wis., 871.

    16

    For the respondent there was a brief by Jenkins, Winkler & Smith, and oral argument by Mr. Winkler. They cited: Keller v. Ybarru, 3 Cal., 147; Great Northern Ry Co. v. Witham, L. R. 9 C. P., 16; Cherry v. Smith, 3 Humph., 19; Highlands C. & M. Co. v. Mathews, 76 N. Y., 145; Washburn v. Fletcher, 42 Wis., 152; Cheney v. Cook, 7 id., 413.

    17

    TAYLOR, J. The only question presented is whether the appellants' letter, and the telegram sent by the respondent in reply thereto, constitute a contract for the sale of 2,000 barrels of Michigan fine salt by the appellants to the respondent at the price named in such letter.

    18

    We are very clear that no contract was perfected by the order telegraphed by the respondent in answer to appellants' letter. The learned counsel for the respondent clearly appreciated the necessity of putting a construction upon the letter which is not apparent on its face, and in their complaint have interpreted the letter to mean that the appellants by said letter made an express offer to sell the respondent, on the terms stated, such reasonable amount of salt as he might order, and as the appellants might reasonably expect him to order, in response thereto. If in order to entitle the plaintiff to recover in this action it is necessary to prove these allegations, then it seems clear to us that the writings between the parties do not show the contract. It is not insisted by the learned counsel for the respondent that any recovery can be had unless a proper construction of the letter and telegram constitute a binding contract between the parties. The alleged contract being for the sale and delivery of personal property of a value exceeding $50, is void by the statute of frauds, unless in writing. Sec. 2308, R. S. 1878.

    19

    The counsel for the respondent claims that the letter of the appellants is an offer to sell to the respondent, on the terms mentioned, any reasonable quantity of Michigan fine salt that he might see fit to order, not less than one car-load. On the other hand, the counsel for the appellants claim that the letter is not an offer to sell any specific quantity of salt, but simply a letter such as a business man would send out to customers or those with whom he desired to trade, soliciting their patronage. To give the letter of the appellants the construction claimed for it by the learned counsel for the respondent, would introduce such an element of uncertainty into the contract as would necessarily render its enforcement a matter of difficulty, and in every case the jury trying the case would be called upon to determine whether the quantity ordered was such as the appellants might reasonably expect from the party. This question would necessarily involve an inquiry into the nature and extent of the business of the person to whom the letter was addressed, as well as to the extent of the business of the appellants. So that it would be a question of fact for the jury in each case to determine whether there was a binding contract between the parties. And this question would not in any way depend upon the language used in the written contract, but upon proofs to be made outside of the writings. As the only communications between the parties, upon which a contract can be predicated, are the letter and the reply of the respondent, we must look to them, and nothing else, in order to determine whether there was a contract in fact. We are not at liberty to help out the written contract, if there be one, by adding by parol evidence additional facts to help out the writing so as to make out a contract not expressed therein. If the letter of the appellants is an offer to sell salt to the respondent on the terms stated, then it must be held to be an offer to sell any quantity at the option of the respondent not less than one car-load. The difficulty and injustice of construing the letter into such an offer is so apparent that the learned counsel for the respondent do not insist upon it, and consequently insist that it ought to be construed as an offer to sell such quantity as the appellants, from their knowledge of the business of the respondents might reasonably expect him to order.

    20

    Rather than introduce such an element of uncertainty into the contract, we deem it much more reasonable to construe the letter as a simple notice to those dealing in salt that the appellants were in a condition to supply that article for the prices named, and requesting the person to whom it was addressed to deal with them. This case is one where it is eminently proper to heed the injunction of Justice FOSTER in the opinion in Lyman v. Robinson, 14 Allen, 254: "That care should always be taken not to construe as an agreement letters which the parties intended only as preliminary negotiations."

    21

    We do not wish to be understood as holding that a party may not be bound by an offer to sell personal property, where the amount or quantity is left to be fixed by the person to whom the offer is made, when the offer is accepted and the amount or quantity fixed before the offer is withdrawn. "We simply hold that the letter of the appellants in this case was not such an offer. If the letter had said to the respondent we will sell you all the Michigan fine salt you will order, at the price and on the terms named, then it is undoubtedly the law that the appellants would have been bound to deliver any reasonable amount the respondent might have ordered, possibly any amount, or make good their default in damages. The case cited by the counsel decided by the California supreme court (Keller v. Ybarru, 3 Cal., 147) was an offer of this kind with an additional limitation. The defendant in that case had a crop of growing grapes, and he offered to pick from the vines and deliver to the plaintiff, at defendant's vineyard, so many grapes then growing in said vineyard as the plaintiff should wish to take during the present year at ten cents per pound on delivery. The plaintiff, within the time and before the offer was withdrawn, notified the defendant that he wished to take 1,900 pounds of his grapes on the terms stated. The court held there was a contract to deliver the 1,900 pounds. In this case the fixing of the quantity was left to the person to whom the offer was made, but the amount which the defendant offered, beyond which he could not be bound, was also fixed by the amount of grapes he might have in his vineyard in that year. The case is quite different in its facts from the case at bar.

    22

    The cases cited by the learned counsel for the appellants, (Beaupre v. P. & A. Tel. Co., 21 Minn., 155, and Kinghorne v. Montreal Tel. Co., U. C. 18 Q. B., 60), are nearer in their main facts to the case at bar, and in both it was held there was no contract. We, however, place our opinion upon the language of the letter of the appellants, and hold that it cannot be fairly construed into an offer to sell to the respondent any quantity of salt he might order, nor any reasonable amount he might see fit to order. The language is not such as a business man would use in making an offer to sell to an individual a definite amount of property. The word "sell" is not used. They say, "we are authorized to offer Michigan fine salt," etc., and volunteer an opinion that at the terms stated it is a bargain. They do not say, we offer to sell to you. They use general language proper to be addressed generally to those who were interested in the salt trade. It is clearly in the nature of an advertisement or business circular, to attract the attention of those interested in that business to the fact that good bargains in salt could be had by applying to them, and not as an offer by which they were to be bound, if accepted, for any amount the persons to whom it was addressed might see fit to order. We think the complaint fails to show any contract between the parties, and the demurrer should have been sustained.

    23

    By the Court.— The order of the circuit court is reversed, and the cause remanded for further proceedings according to law.

  • 8 3.3.6.1 Fairmount Glass Works v. Grunden-Martin Woodenware Co.

    1

    106 Ky. 659
    FAIRMOUNT GLASS WORKS
    v.
    GRUNDEN-MARTIN WOODENWARE CO.
    [1]
    Court of Appeals of Kentucky
    May 21, 1899

    2

    Appeal from circuit court, Jefferson county, law and equity division.

    3

    "To be officially reported."

    4

    Action by the Grunden-Martin Woodenware Company against the Fairmount Glass Works to recover damages for breach of contract. Judgment for plaintiff, and defendant appeals.

    5

    Affirmed.

    6

    W. W. Thum and Humphrey & Davie, for appellant. O. A. Wehle and A. M. Kutledge, for appellee.

    7

    HOBSON, J. On April 20, 1893, appellee wrote appellant the following letter: 

    8

    "St. Louis, Mo., April 20, 1895. Gentlemen: Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in a case, either delivered here, or f. o. b. cars your place, as you prefer. State terms and cash discount. Very truly, Grunden-Martin W. W. Co."

    9

    To this letter appellant answered as follows:

    10

    "Fairmount, Ind., April 23, 1895. Grunden-Martin Wooden Ware Co., St. Louis, Mo.— Gentlemen: Replying to your favor of April 20, we quote you Mason fruit jars, complete, in one-dozen boxes, delivered in East St. Louis, 111.: Pints $4.50, quarts $5.00, half gallons $6.50, per gross, for immediate acceptance, and shipment not later than May 15, 1895; sixty days' acceptance, or 2 off, cash in ten days. Yours, truly. Fairmount Glass Works.

    "Please note that we make all quotations and contracts subject to the contingencies of agencies or transportation, delays or accidents beyond our control."

    11

    For reply thereto, appellee sent the following telegram on April 24, 1895:

    12

    "Fairmount Glass Works, Fairmount, Ind.:

    Your letter twenty-third received. Enter order ten car loads as per your quotation. Specifications mailed. Grunden-Martin W. W. Co."

    13

    In response to this telegram, appellant sent the following:

    14

    "Fairmount, Ind., April 24, 1895. Grunden-Martin W. W. Co., St. Louis, Mo.: Impossible to book your order. Output all sold. See letter. Fairmount Glass Works."

    15

    Appellee insists that, by its telegram sent in answer to the letter of April 23d, the contract was closed for the purchase of 10 car loads of Mason fruit jars. Appellant insists that the contract was not closed by this telegram, and that it had the right to decline to fill the order at the time it sent its telegram of April 24. This is the chief question in the ease. The court below gave judgment in favor of appellee, and appellant has appealed, earnestly insisting that the judgment is erroneous.

    16

    We are referred to a number of authorities holding that a quotation of prices is not an offer to sell, in the sense that a completed contract will arise out of the giving of an order for merchandise in accordance with the proposed terms. There are a number of cases holding that the transaction is not completed until the order so made is accepted. 7 Am. & Eng. Enc. Law (2d Ed.) p. 138; Smith v. Gowdy, 8 Allen, 506; Beaupre v. Telegraph Co., 21 Minn. 155. But each case must turn largely upon the language there used. In this case we think there was more than a quotation of prices, although appellant's letter uses the word "quote" in stating the prices given. The true meaning of the correspondence must be determined by reading it as a whole. Appellee's letter of April 20th, which began the transaction, did not ask for a quotation of prices. It reads: "Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars. * * * State terms and cash discount." From this appellant could not fail to understand that appellee wanted to know at what price it would sell it ten car loads of these jars; so when, in answer, it wrote: "We quote you Mason fruit jars * * * pints $4.50, quarts $5.00, half gallons $6.50, per gross, for immediate acceptance:* * * 2 off, cash in ten days."— it must be deemed as intending to give appellee the information it had asked for. We can hardly understand what was meant by the words "for immediate acceptance," unless the latter was intended as a proposition to sell at these prices if accepted immediately. In construing every contract, the aim of the court is to arrive at the intention of the parties. In none of the cases to which we have been referred on behalf of appellant was there on the face of the correspondence any such expression of intention to make an offer to sell on the terms indicated. In Fitzhugh v. Jones, 6 Munf. 83, the use of the expression that the buyer should reply as soon as possible, in case he was disposed to accede to the terms offered, was held sufficient to show that there was a definite proposition, which was closed by the buyer's acceptance. The expression in appellant's letter, "for immediate acceptance," taken in connection with appellee's letter, in effect, at what price it would sell it the goods, is, it seems to us, much stronger evidence of a present offer, which, when accepted immediately, closed the contract. Appellee's letter was plainly an inquiry for the price and terms on which appellant would sell it the goods, and appellant's answer to it was not a quotation of prices, but a definite offer to sell on the terms indicated, and could bot be withdrawn after the terms had been accepted. It will be observed that the telegram of acceptance refers to the specifications mailed. These specifications were contained in the following letter: "St. Louis, Mo., April 24, 1895. Fairmount Glass-Works Co., Fairmount, Ind.—Gentlemen: We received your letter of 23rd this morning, and telegraphed you in reply as follows: 'Your letter 23rd received. Enter order ten car loads as per your quotation. Specifications mailed,'—which we now confirm. We have accordingly entered this contract on our books for the ten cars Mason green jars, complete, with caps and rubbers, one dozen In case, delivered to us in East St. Louis at $4.50 per gross for pint, $5.00 for quart, $6.50 for one-half gallon. Terms, 60 days' acceptance, or 2 per cent, for cash In ten days, to be shipped not later than May 15, 1895. The jars and caps to be strictly first-quality goods. You may ship the first car to us here assorted: Five gross pint, fifty-five gross quart, forty gross one-half gallon. Specifications for the remaining 9 cars we will send later. Grunden-Martin W. W. Co." It is Insisted for appellant that this was not an acceptance of the offer as made; that the stipulation, "The jars and caps to be strictly first-quality goods," was not in their offer; and that, it not having been accepted as made, appellant is not bound. But it will be observed that appellant declined to furnish the goods before it got this letter, and in the correspondence with appellee it nowhere complained of these words as an addition to the contract. Quite a number of other letters passed, in which the refusal to deliver the goods was placed on other grounds, none of which have been sustained by the evidence.

    17

    Appellee offers proof tending to show that these words, in the trade in which parties were engaged, conveyed the same meaning as the words used in appellant's letter, and were only a different form of expressing the same idea. Appellant's conduct would seem to confirm this evidence.

    18

    Appellant also insists that the contract was indefinite, because the quantity of each size of the jars was not fixed, that 10 car loads is too indefinite a specification of the quantity sold, and that appellee had no right to accept the goods to be delivered on different days. The proof shows that "10 car loads" is an expression used In the trade as equivalent to 1,000 gross, 100 gross being regarded a car load. The offer to sell the different sizes at different prices gave the purchaser the right to name the quantity of each size, and, the offer being to ship not later than May 15th, the buyer had the right to fix the time of delivery at any time before that. Sousely v. Burns' Adm'r, 10 Bush, 87; Williamson's Heirs v. Johnston's Heirs, 4 T. B. Mon. 253; Wheeler v. Railroad Co., 135 U. S. 31, 5 Sup. Ct. 1001, 1160. The petition, if defective, was cured by the judgment, which is fully sustainedby the evidence.

    19

    Judgment affirmed.

    20

    [1] Reported by Edward W. Hines, Esq., of the Frankfort bar, and formerly state reporter.

  • 9 3.3.6.2 Notes - Fairmont Glass Works v. Crunden-Martin Woodenware Co.

    1

    NOTE

    2

    Read Wilhelm Lubricating Co. v. Battrud, 197 Minn. 626, 268 N.W. 634, 106 A.L.R. 1279 (1936). How would both cases be decided under U.C.C. §§2-204(3), 2-311? See further Patterson, Analysis of Uniform Commercial Code 268-279, N.Y.L. Revision Commission, Leg. Doc. No. 65(c), 329-330 (1955); Comment, 23 U. Chi. L. Rev. 499 (1956).

  • 10 3.3.7.1 Channel Master Corp. v. Aluminum Ltd. Sales

    1
    4 N.Y.2d 403 (1958)
    2
    Channel Master Corporation, Plaintiff-Respondent,
    v.
    Aluminium Limited Sales, Inc., Defendant-Appellant.
    3

    Court of Appeals of the State of New York.
    Argued May 6, 1958.
    Decided June 25, 1958.

    4

    A. Donald MacKinnon and Janet P. Kane for appellant.

    5

    Abraham Streifer and Louis Berger for respondent.

    6

    Chief Judge CONWAY and Judges DESMOND and FROESSEL concur with Judge FULD; Judge BURKE dissents in an opinion in which Judges DYE and VAN VOORHIS concur.

    7

    [405] FULD, J.

    8

    On this appeal, here on questions certified by the Appellate Division, we are called upon to determine the sufficiency of a complaint in a tort action for damages based on fraud and deceit.

    9

    The plaintiff, a manufacturer and processor of aluminum, requires for its business a dependable supply of aluminum ingot in large quantity. The defendant is engaged in the business of selling that metal. The amended complaint states two causes of action.

    10

    In the first cause of action, the plaintiff alleges that in April, 1954, the defendant represented that "its available and uncommitted supplies and productive capacity of aluminum ingot, then existing, were such as rendered it then capable of selling to the plaintiff 400,000 pounds per month and that it had entered into no binding commitments with other customers which could in the future reduce such available and uncommitted supplies and productive capacity." The complaint then recites that such [406] representations were made "with the intention and knowledge that plaintiff should rely thereon and in order to induce the plaintiff to refrain from entering into commitments with other suppliers and to purchase the greater part of its requirements from the defendant", that the plaintiff acted in reliance on the representations and that they were false and known by the defendant to be so. In truth and in fact, the complaint further asserts, the defendant had previously entered into long-term contracts with other customers which committed all of the defendant's supplies and productive capacity for many years to come. By reason of the defendant's fraudulent misrepresentations and the plaintiff's reliance thereon, the complaint continues, the plaintiff refrained from securing commitments for future supplies from others and was thereby injured in its business.

    11

    In the second cause of action, the plaintiff alleges that the defendant represented that it was its intention to make available to the plaintiff 400,000 pounds of aluminum ingot a month for a period of five years; that such representation was false and known by the defendant to be false; that it was the defendant's intention to sell to the plaintiff only such aluminum as might from time to time become available in the event that other customers to whom the defendant had given binding commitments should choose to forego the supplies committed to them and that the plaintiff relied on that representation to its injury.

    12

    The defendant moved to dismiss the complaint, urging the insufficiency of both causes of action, under rule 106 of the Rules of Civil Practice, and the inadequacy of the second cause, under rule 107, on the ground that it "is predicated on an alleged oral promise unenforceable under the * * * Statute of Frauds". The court at Special Term denied the motion insofar as it was based on the statute of frauds, for the reason that "no agreement or contract is alleged", but granted the defendant's motion to strike both causes of action for insufficiency. On appeal, the Appellate Division unanimously reversed and denied the motion to dismiss.

    13

    To maintain an action based on fraudulent representations, whether it be for the rescission of a contract or, as here, in tort for damages, it is sufficient to show that the defendant knowingly [407] uttered a falsehood intending to deprive the plaintiff of a benefit and that the plaintiff was thereby deceived and damaged. (See Brackett v. Griswold, 112 N.Y. 454, 467; Hadcock v. Osmer, 153 N.Y. 604, 608; Rice v. Manley, 66 N.Y. 82, 84; 3 Restatement, Torts, § 525, p. 59; 1 Harper & James on The Law of Torts [1956], § 7.1, pp. 527-528; Prosser on Torts [2d ed., 1955], § 86, p. 523.) The essential constituents of the action are fixed as representation of a material existing fact, falsity, scienter, deception and injury. (See Sabo v. Delman, 3 N Y 2d 155, 159-160; Deyo v. Hudson, 225 N.Y. 602, 612; Ochs v. Woods, 221 N.Y. 335, 338; Urtz v. New York Cent. & H. R. R. R. Co., 202 N.Y. 170, 173.) Accordingly, one "who fraudulently makes a misrepresentation of * * * intention * * * for the purpose of inducing another to act or refrain from action in reliance thereon in a business transaction" is liable for the harm caused by the other's justifiable reliance upon the misrepresentation. (3 Restatement, Torts, § 525, p. 59.)

    14

    As examination of the complaint demonstrates, it contains all the necessary elements of a good cause of action, including statements of existing fact, as opposed to expressions of future expectation. The representations allegedly made, that the defendant had "available and uncommitted supplies and productive capacity of aluminum ingot" sufficient to render it then capable of selling to the plaintiff 400,000 pounds a month and that it had entered into no binding commitments which could in the future reduce such available and uncommitted supplies and productive capacity and that it was its intention to make available and to sell to the plaintiff the number of pounds specified for a period of five years, related to the defendant's present intention. A person's intent, his state of mind, it has long been recognized, is capable of ascertainment and a statement of present intention is deemed a statement of a material existing fact, sufficient to support a fraud action. (See Sabo v. Delman, 3 N Y 2d 155, 160, supra; Deyo v. Hudson, 225 N.Y. 602, 612, supra; Ritzwoller v. Lurie, 225 N.Y. 464, 468; Adams v. Gillig, 199 N.Y. 314, 319-322; 3 Restatement, Torts, § 530, pp. 69-71; 1 Harper & James, op. cit., § 7.10, pp. 570-573; Prosser, op. cit., § 90, pp. 563-564.) Here, just as in Sabo v. Delman (3 N Y 2d, at p. 160) and in the Ritzwoller case (225 N. Y., at p. 468), "the allegations in the complaint describe a case where a defendant [408] has fraudulently and positively as with personal knowledge stated that something was to be done when he knew all the time it was not to be done and that his representations were false. It is not a case of prophecy and prediction of something which it is merely hoped or expected will occur in the future, but a specific affirmation of an arrangement under which something is to occur, when the party making the affirmation knows perfectly well that no such thing is to occur. Such statements and representations when false are actionable".

    15

    The defendant also argues that the action cannot be founded on any promise which falls within the statute of frauds. Although there is considerable doubt that the questions certified pose that defense for our consideration, we shall assume that the second question could be so construed.

    16

    The present action is in tort, not contract, depending not upon agreement between the parties, but rather upon deliberate misrepresentation of fact, relied on by the plaintiff to his detriment. In other words, the "legal relations" binding the parties are created by the utterance of a falsehood "with a fraudulent intent" and by reliance thereon (Deyo v. Hudson, 225 N.Y. 602, 612, supra) and the cause of action is entirely "independent of contractual relations between the parties." (1 Harper & James, op. cit., p. 527.) As we wrote in Sabo v. Delman (3 N Y 2d 155, 159, supra), "it is well to bear in mind that the complaint before us neither asserts a breach of contract nor attempts to enforce any promise made by defendants." If the proof of a promise or contract, void under the statute of frauds, is essential to maintain the action, there may be no recovery, but, on the other hand, one who fraudulently misrepresents himself as intending to perform an agreement is subject to liability in tort whether the agreement is enforcible or not. (3 Restatement, Torts, § 525, p. 59 et seq.; § 530, Comment b, p. 70.) The policy of the statute of frauds is "not directed at cases of dishonesty in making" a promise (Prosser, op. cit., p. 565); never intended as an instrument to immunize fraudulent conduct, the statute may not be so employed.

    17

    It is not inappropriate to say, as we did in the Sabo case (3 N Y 2d, at p. 162), that whether the plaintiff will be able to establish the allegations of its complaint is "necessarily reserved for trial. We decide only that the complaint before us states a cause of action".

    18

    [409] The order appealed from should be affirmed, with costs, and the questions certified answered in the affirmative.

    19

    BURKE, J. (dissenting).

    20

    The amended complaint should be dismissed because the misrepresentations alleged relate only to future expectations.

    21

    No doubt a remedy in tort would be available to the plaintiff if the fraudulent promissory representations dealt with matters completely under the control of the defendant and implemented existing contractual obligations (Sabo v. Delman, 3 N Y 2d 155; A. S. Rampell, Inc., v. Hyster Co., 3 N Y 2d 369). It does not follow that there would be also a remedy where the representations are nothing more than a recital of the defendant's predictions or statements of expectations (Adams v. Clark, 239 N.Y. 403, 410). The amendment of the original complaint by the incorporation of the words "then existing"; "then capable of selling"; "that it had entered into no binding commitments with other customers" and "the period of scarcity which followed" has not cured the defects inherent in the original complaint. When the amended complaint is read as a whole and compared with the original complaint, it is clearly evident that the alleged representations relate to an unknown, uncertain and indefinite future period, not to an existing fact. These allegations do not treat at a particular time with the state of mind of a person in possession of all information whose expressed intentions as to the future can readily be effectuated, but with unpredictable problems of the logistics of supply and demand of not only finished products but also raw materials in a huge industry beset by many varieties of weather, of labor relations, of customers' demands and of government needs. The alleged representations under such circumstances could neither be affirmation of events which, when made, defendant knew would not occur nor assertions of present facts susceptible of knowledge. Any reliance on the alleged representations, therefore, was unjustifiable as plaintiff knew perfectly well that the representations of necessity were speculative. Such representations will not support an action for fraud. We do not say that an allegation of a promise made with the present intention to break it would not be actionable. Cases such as Deyo v. Hudson (225 N.Y. 602) and Adams v. Clark (supra) are cited to uphold this doctrine. But here the defendant made no promise and the plaintiff parted with nothing.

    22

    [410] As we regard them, the alleged representations do not reflect a statement of present intention which could be judged a statement of an existing fact which may be the basis for a fraud action.

    23

    Therefore, the order appealed from should be reversed and the amended complaint should be dismissed.

    24

    Order affirmed, etc.

  • 11 3.3.7.2 Notes - Channel Master Corp. v. Aluminum Ltd. Sales

    1

    NOTE

    2

    1. Llewellyn criticizes both the majority and the dissent in the Channel Master case with uncharacteristic vehemence:

    3

    The court finds allegations of fact and reliance sufficient to make a case in fraud, finds the cause to be entirely independent of contractual relations, and finds the statute of frauds to be inapposite in law and, on the basis of an inconclusive passage from Prosser, in policy. The three-judge dissent this time accepts, seemingly, each of these doctrinal premises; it attacks solely the application: the representations were not of facts susceptible of knowledge. For such a court, on such an issue, this is truly extraordinary. The situation is one in which the torts theorists (Restatement, Harper and James, Prosser, all gathered and cited) have launched as unconsidered a jamboree as ever has been suggested in the books: in the instant "application" of the idea, word-of-mouth negotiations for a contract which have led to no acceptance, which need not have led even to an offer, and which would in an action on an actually completed contract be incapable of submission to the jury for lack of a signed writing these become admissible in the teeth of the statute against frauds and perjuries, admissible, moreover, in such fashion as to allow damages of a range and extent which would be dubious of procurement in any action based on an agreement fully closed, formally authenticated, and unambiguously relied on. All of this by virtue of merely adjusting the pleadings and the evidence to run down an alley which is rather easier to travel with persuasiveness than is the alley of contract-closing and one in which any perjury or mistake is harder to pinpoint for pillory. For these are not the type of "conversations" which (like a true·blue offer or acceptance for a five-year deal) are hard to believe in unless "confirmed" in writing on the same day; instead, they run loose, without confirmation, or exactness, or top limit, or any other check-up. And these adventures into space are undertaken on the policy say-so not of thoughtful commercial scholars who are for instance somewhat bothered about a bit of untoward tightness and overtechnicality in the contract rules of damages, or about an unwise and unbusinesslike precisionism in requiring a mere "note or memorandum" under the Statute of Frauds to recite accurately every agreed term. No, these adventures are undertaken instead on somewhat loose general language about misrepresentation put out by scholars whose delight is to see the law of torts inherit the earth. Extraordinary indeed; and happily most uncharacteristic.

    4

    Llewellyn, The Common Law Tradition 473 (l960).

    5

    Hill, Damages for Innocent Misrepresentation, 73 Colum. L. Rev. 679, 715 (l973), defends the Channel Master court's treatment of the Statute of Frauds and points out that "[t]he issue is one on which the courts are divided."

    6

    2. Suppose that after lengthy bickering about the sale of a generator, the parties have come to an agreement as to its price.  But the terms of payment have not been agreed upon.  The seller wants 10 percent of the purchase price, 50 percent on delivery, and the balance on acceptance.  The buyer in response tells the seller that he generally pays 9 percent on the tenth of the month following delivery and the balance on final acceptance.  The seller, who claims that he does not recall the buyer’s response, fails to deliver.  Is this a situation covered by U.C.C. §2-204(3), dealing with “open terms”?  If this is the case, would §§2-305, 3-310 apply?  The hypothetical was suggested by Southwest Engineering Co. v. Martin Tractor Co., 205 Kan. 684, 473 P.2d 18 (1970), applying §§2-204(3) and 3-310(a).  Does that situation involve an assent, or a failure to agree?  See further C & J Fertilizer, Inc. v. Allied Mutual Insurance Co., 227 N.W.2d 169, 172, 176 (Iowa 1975).

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