Source: https://law.justia.com/cases/federal/appellate-courts/F2/643/1185/454219/
Timestamp: 2019-11-12 21:21:28
Document Index: 511625508

Matched Legal Cases: ['§ 35', '§ 76', '§ 40', '§ 74', '§ 53', '§ 73', '§ 72']

Houston Dairy, Inc., Plaintiff-appellant, v. John Hancock Mutual Life Insurance Company, Defendant-appellee, 643 F.2d 1185 (5th Cir. 1978) :: Justia
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Houston Dairy, Inc., Plaintiff-appellant, v. John Hancock Mutual Life Insurance Company, Defendant-appellee, 643 F.2d 1185 (5th Cir. 1978)
U.S. Court of Appeals for the Fifth Circuit - 643 F.2d 1185 (5th Cir. 1978)
It is fundamental that a contract is formed only upon acceptance of an offer. Couret v. Conner, 118 Miss. 598, 79 So. 230, 232 (1918). Just as basic is the principle that an offeror is free to limit acceptance to a fixed time period. 1 A Corbin, Contracts § 35 (1963); 1 S. Williston, Contracts § 76 (3d ed. W. Jaege, 1957); Restatement of Contracts § 40 (1932). Once the time period has expired, a belated attempt to accept would be ineffective. However, such an untimely attempt to accept normally constitutes a counter offer which would shift the power of acceptance to the original offeror. 1 Corbin § 74; 1 Williston §§ 53, 93; Restatement § 73. Additionally, acceptance of a counter offer is established only by conforming to the rules governing acceptance, not a separate theory of "waiver and ratification." Kurio v. United States, 429 F. Supp. 42, 64 (S.D. Tex. 1970).1
According to John Hancock, depositing Houston Dairy's check was itself sufficient to operate as communication of its acceptance of the counter offer. John Hancock argues that its silence plus retention of Houston Dairy's money constituted acceptance and notification. Indeed, Mississippi has specifically recognized the validity of acceptance by silence within the guidelines laid down in Restatement § 72.2 See Old Equity Life Insurance Co. v. Jones, 217 So. 2d 648, 651 (Miss.1969); Ammons v. Wilson & Co., 176 Miss. 645, 170 So. 227, 228 (1936). However, the present facts do not fit within these guidelines. Houston Dairy neither had previous dealings nor had otherwise been led to understand that John Hancock's silence and temporary retention of its deposit would operate as acceptance. In addition, Houston Dairy had no knowledge that its check had been deposited in John Hancock's depository. Since Houston Dairy sent a cashier's check, it could not have known the check had even been deposited unless notified by John Hancock or its bank. No such notice arrived from John Hancock and none is required from the bank.
In Kurio, the court considered an issue in contract law similar to the instant case. An offer had been terminated by lapse of time and a belated attempt to accept the offer was construed as a counter offer. As in the present case, an argument was made that the original offeror could waive the untimeliness of the acceptance. After outlining the basic requirements for formation of a contract and acceptance of a counter offer, the court dismissed the "waiver" argument stating that the original offer cannot be revived once it is terminated. The original offeror may only renew the original offer or accept the counter offer implicit in the defective acceptance. Consequently, once an offer's time period has terminated, a contract may be formed only by formal acceptance of the counter offer and not by a theory of waiver of the expired time limitation. 429 F. Supp. at 63-65