Story Case

Alderson Brothers, brokers in New York City, sent their Chicago representative to the firm of Barnwell & Co. in Chicago, to negotiate for some wheat which Alderson Bros, needed very badly. Barnwell & Co. did not wish to sell until the market became more firm and stable. The Alderson representative, however, persuaded them to mail an offer to Alderson Bros, for the sale of 10,000 bushels at 90½c. Barnwell & Co. knew that it required 20 or 24 hours for a letter to reach New York; hence if the markets should advance in the next 15 hours they could countermand the offer by telegraph. But the Alderson representative telegraphed his receipt and the fact of the offer to Aider-son Bros, and Alderson Bros, immediately telegraphed acceptance. Ten hours later the market advanced to 94c and Barnwell & Co. telegraphed a revocation of the offer. This message, Alderson Bros, received before the letter containing the offer. Barnwell & Co. refused to deliver the wheat on the grounds that they revoked the offer before acceptance.

Alderson Bros, claim that the offer was complete when mailed and could be accepted any time after it was mailed. Barnwell & Co. claim that an offer is never completed until the letter containing the offer is received. Both parties admit that the communication of the Alderson representative to Alderson Bros, was not an offer from Barnwell & Co. and could not be accepted.

Ruling Court Case. Adams Vs. Lindsell, Volume 1 Bamwall And Anderson English Reports, Page 681

Lindsell was a wool dealer at St. Ives in the county of Huntington. On Tuesday the 22nd of September, Lindsell wrote the following letter to Adams, who was a woolen manufacturer in Worcestershire:

"We now offer you eight hundred tods of wether fleeces, of a good fair quality of our country wool, at 35s 6d per tod, - receiving your answer in course of post".

The letter was misdirected by Lindsell, as a result of which it did not reach Adams until Friday the 25th. Adams immediately wrote a letter of acceptance. Because of the delay in receiving the offer, the acceptance did not reach Lindsell until Tuesday the 29th. A reply in course of post, had the offer been directed rightly would have reached Lindsell on Sunday or Monday, 27th or 28th respectively. On Monday, not hearing from Adams, Lindsell sold all the wool then on hand. When he did receive the letter of acceptance, he could not fill the order, and accordingly replied that it was too late. Adams then sues for damages.

The defendant Lindsell contended that there was no contract because he had put a time limit upon the existence of the offer. He argued that the offer was revoked before it was accepted.

Decision

An offer becomes complete when it is received by the offeree. An offer by mail or telegraph is a continuing offer which remains open until it is received by the offeree, unless in some way a revocation of the offer is communicated to the offeree before he receives or accepts the offer.

The court said in this case: "The defendants must be considered in law as making, during every instant of the time their letter was travelling, the same identical offer to the plaintiff, and then the contract is complete by the acceptance of it by the latter. Then, as to the delay in notifying the acceptance, that arises entirely from the mistake of the defendants, and therefore it must be taken as against them that the plaintiff's answer was received in the course of post".

Judgment was therefore given for Adams in this action.

Ruling Law. Story Case Answer

Where a person makes an offer by mail or by a telegram, it is obvious that the offer is not complete until it has been received by the person to whom it is addressed. For, until he receives it, he knows nothing of it, and it has just been established that a person cannot accept an offer until it has been communicated to him.

In the Story Case, the offer was meant to be complete when the letter containing the offer was received. Hence Alderson Bros, should lose.