Story Case

Deebe Fraser said to his nephew:

"If you will make a trip to the Mardi Gras Festival in New Orleans, I will pay your expenses." The nephew, John Fraser, said that he would make the trip and he started to prepare himself. He purchased a new suit of clothes that he would not otherwise have bought; he applied for and received a vacation; he purchased his ticket and sleeper to New Orleans. Then his Uncle said:

"I have changed my mind. If you want to go to the Festival you must finance the trip yourself".

John Fraser insisted that Deebe pay for the expenses he had already incurred in preparation for the trip and Deebe refused to do so. John thought that it was fair that Deebe pay for the damage that had accrued to him because of Deebe's change of mind and he brought suit for breach of contract. Deebe defended, on the ground that his offer had not been accepted before withdrawal. Is this defense good?

Ruling Court Case. Fisher Vs. Seltzer, Volume 23 Pennsylvania State Reports, Page 308; Volume 62 American Decisions, Page 335

Fisher was sheriff and, in the performance of his duties, was preparing to auction off certain property under an execution sale. Before the sale began, the sheriff prescribed certain rules or conditions to govern the sale; one of these was that "no person shall retract his or her bid." At the sale Seltzer bid $7,000 for the land in question, under the belief that it was to be sold free of a certain mortgage on it for $6,000.

When he discovered his mistake, he retracted his bid before the auctioneer, the sheriff, had declared him to be the highest bidder. The sheriff refused to recognize his right to withdraw his offer, and declared him the highest and last bidder, and demanded the money therefor. Unable to get it, he brought suit.

Seltzer insisted that no contract was made between them, because his bid was only an offer, which might be withdrawn at any time before it was accepted.

Decision

The bid of Seltzer was only an offer to buy the property at that price. Until his offer was accepted by the sheriff, it remained a simple offer, which might be revoked. Before it was accepted, he did revoke it, and no contract resulted. This is true, even though the sheriff expressly stated that no bids might be withdrawn; he had no right to bind the bidders by such a rule. Before acceptance, there is both the right and the power to withdraw an offer. This is distinguished from the relationship after acceptance when the right to withdraw is gone.

Mr. Justice Lewis said: "Mutuality is so essential to the validity of contracts not under seal that they cannot exist without it. A bid at an auction, before the hammer falls, is like an offer before acceptance. In such a case, there is no contract and the bid may be withdrawn by right without liability or injury to any one, if done before the hammer falls".

Judgment was, therefore, given for Seltzer in this action.

Ruling Law. Story Case Answer

The maker of an offer has the right to withdraw the offer before it is accepted. After it is accepted and the contract is completed, the right to withdraw is gone. But the power to withdraw still exists, just as one has the power to injure another, although not the right. In the Story Case, there was an acceptance by Frazer in his statement that he would make the trip. Thereafter, Deebe Frazer had not the right to withdraw. But although he had not the right to break his contract, he has still power to do so and became liable for the damages incurred by the other to that time, in reliance on the contract. Therefore, John Fraser can recover for the losses incurred to the time when Deebe changed his mind.