This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
It seems like an elementary proposition, scarcely needing demonstration, that an offer can not be accepted so as either to confer rights or to impose liabilities until it has been communicated to the person to whom it is to be made.1 This rule is unquestioned in contracts where alleged acceptance of an uncommunicated offer is invoked to impose a liability upon the party accepting. Thus the unexpressed and uncommunicated intention of one who claims to act for himself on the one part and for a corporation on the other, that the corporation shall pay certain individual debts, does not constitute a contract.2 The intention of one party not expressed in words or by outward acts, and which is not known to the adversary party, is not a part of the contract.3 A change in the rules of a bank does not bind customers to whom no notice of such change has been given.4 A letter stating, "would like to know if your company is going to settle this account. If not, must proceed to collect it," was sent to the engineer of a railroad company. The account referred to was due from a contractor who was building a new line for such railroad. To this letter a reply was sent: "This company expects to settle all bills of (such contractor) not later than (a date fixed). We do not desire any judgments or liens upon the work." It was held that this did not import a promise by the railroad company to pay such account; and that the unexpressed intention of such creditor to attempt to take a lien on the property of such railroad, if such account was not paid, and his forbearance to attempt to take a lien in reliance upon such letter, could not be regarded as a part of the agreement, since they were not communicated to the railroad; and, as the claim was not one for which a lien could be taken, the railroad could not be presumed to know that the creditor intended to attempt to enforce payment thereof, out of the property of the railroad.5 The vote of a corporation has no effect as a contract until communicated to and accepted by the adversary party.6 A telegram from A, giving prices of glass jars "if specifications favorable," being too indefinite an offer to form the basis of a contract,7 can not be supplemented by a letter received by B after he had answered A's telegram, so as to constitute a complete contract.8 If A sent a message to a telegraph office, written on plain paper, and the operator pasted it on a printed blank, A is not bound by terms in such blank.9 On the same theory a telegram which is transmitted to the sending office by telephone, is not subject to the terms contained in the ordinary blank used by such company, at least if the sender of such message does not know what such terms are.10 On this particular application of the general principle, there is, however, a conflict of authority. It has been urged that one who sends a message for transmission must be regarded as assenting to the terms contained in the ordinary contract of the telegraph company, especially if the acceptance of the message on other terms would be illegal discrimination.11 Accordingly, a telegraph message which is sent to the sending office by telephone, is held to be subject to the ordinary provisions in the ordinary blank form which is used by such telegraph company.12 If a bank keeps a book for the signatures of its depositors, a depositor who signs for the purpose of identification is not bound by a provision found in the heading of such book which relieves stockholders from liability to depositors.13 Where a shipper loaded cotton into a car standing on a side track, no agent of the railroad company being advised thereof, no contract existed.14
1 Iowa. James McCoy Co. v. Smith, 181 la. 707, 165 N. W. 88.
Missouri. Anderson v. Hall, 273 Mo. 307, 202 S. W. 539.
Montana. Armington v. Stelle, 27 Mont. 13, 60 Ac. 115.
New Jersey. Stengel v. Sergeant, 74 N. J. Eq. 20, 68 Atl. 1106.
Oregon. Brown v. Farmers' & Merchants' Nat. Bank, 76 Or. 113, 147 Ac. 537.
Pennsylvania. Delaware, L. & W.
Ry. Co. v. Water Power & Supply Co., 227 Pa. St. 639, 76 Atl. 425. For communication of acceptance, see Sec. 151 et seq.
2 Durlacher v. Frazer, 8 Wyom. 58, 80 Am. St. Rep. 918, 55 Ac. 306.
3 Roberta Mfg. Co. v. Royal Exchanges Assurance Co., 161 N. Car. 88, 76 S. E. 865. See Sec. 80 to 83.
4 Kimins v. Boston Five Cent Savings Bank, 141 Mass. 33, 6 N. E. 242.
5 Cleveland, C. C. & St. L. Ry. Co. v. Shea, 174 Ind. 303, 91 N. E. 1081.
6 Sears v. Ry., 152 Mass. 151, 9 L. R. A. 117, 25 N. E. 98; Benton v. Springfield Y. M. C. A., 170 Mass. 534, 49 N. E. 928.
7 See Sec. 95.
8 James v. Bottle Co., 69 Mo. App. 207.
9 Harris v. Telegraph Co., 121 Ala. 519, 77 Am. St. Rep. 70, 25 So. 910; Western Union Telegraph Co. v. Schade, 137 Tenn. 214, 192 S. W. 924. And, see Pearsall v. Telegraph Co., 124 N. Y. 256, 21 Am. St. Rep. 662, 26 N. E. 534;
Anderson v. Telegraph Co., 84 Tex. 17, 19 S. W. 285.
10 Bowie v. Western Union Telegraph Co., 78 S. Car. 424, 54 S. E. 65; Western Union Telegraph Co. v. Douglass, 104 Tex. 66, 133 S. W. 877.
11 Shawnee Milling Co. v. Postal Telegraph-Cable Co., 101 Kan. 307, L. R. A. 1917F, 844, 166 Ac. 493.
12 Shawnee Milling Co. v, Postal Telegraph-Cable Co., 101 Kan. 307, L. R. A. 1917F, 844, 166 Ac. 493. See also, Simpson v. Western Union Telegraph Co., 104 S. Car. 393, 89 S. E. 321.
A payment by the debtor of less than the amount which the creditor claims to be due, is not a compromise or an accord and satisfaction, unless the debtor has communicated to the creditor an offer to make such payment in full satisfaction of such debt.15 If a check is sent for less than the amount due, and the debtor does not notify the creditor that he offers such check in full, the fact that the creditor cashes such check does not amount to a contract of compromise.16 In some jurisdictions the use of the words "in full," does of itself not show such offer;17 nor does a statement that a check is "in payment of all (goods) received to date."18 A letter which states that a check is enclosed "in settlement of the amount still due to you according to the statement of the account enclosed, which you will kindly carry to the credit of our account," is not an offer of compromise and the acceptance of such check does not prevent the creditor from maintaining an action to collect the balance of such account.19 Drawing a draft upon a debtor, which is not intended to be for the full amount of the debt, can not so be treated by the debtor.20
If the alleged offer consists of acts, it is necessary to show that such acts are brought to the knowledge of the adversary party.21