Opinion ID: 388224
Heading Depth: 1
Heading Rank: 2

Heading: Was there a contract?

Text: 7 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 8 It is therefore clear in the instant case that upon expiration of the seven-day time period, John Hancock's offer terminated. Thus the action taken by Houston Dairy in signing and returning the commitment letter subsequent to the termination of the offer constituted a counter offer which John Hancock could accept within a reasonable time. 9 In Mississippi, the courts have long recognized that for acceptance to have effect, it must be communicated to the proposer of the offer. See Pioneer Box Co. v. Price Veneer & Lumber Co., 132 Miss. 189, 96 So. 103, 105 (1923). John Hancock contends it did accept Houston Dairy's counter offer and that the acceptance was communicated to Houston Dairy. 10 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. 11 The Mississippi Supreme Court held in L. A. Becker v. Clardy, 96 Miss. 301, 51 So. 211 (1910) that the mere depositing of a check was insufficient to constitute acceptance of an offer. There, an offeror sent a $100 downpayment along with its order for merchandise to the offeree. As was its policy, the offeree immediately deposited the check in its account, which was later paid in due course by the bank upon which the check was drawn. However, the offeree subsequently mailed a letter to the offeror rejecting the offer and enclosed a check for $100. The court held that upon receipt of the order and downpayment, the offeree was entitled to a reasonable time in which to examine and determine whether it would accept or reject (the order) .... Depositing the check for collection, therefore, did not constitute acceptance of the order. Id., 51 So. at 213. 3 12 John Hancock also contends that Houston Dairy was notified of its acceptance in the conversation between the attorneys for both parties on January 28. However, a review of the testimony concerning that conversation shows no communication of acceptance. Indeed, John Hancock's closing attorney testified that at the time of his conversation with Houston Dairy's attorney, he had not received the executed commitment letter and had no knowledge a counter offer had even been made. His conversation only concerned the method to be used to close the loan and the distribution of the fee to be charged, not acceptance of the counter offer. Houston Dairy cannot be deemed to have knowledge of John Hancock's acceptance simply by requesting and receiving information on the procedures for closing a loan should an agreement be reached.