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.
If A offers to B to guarantee C's debt to B, he may so word his offer that the only acceptance necessary is B extending credit, forbearing suit, or whatever else may be the consideration of the guaranty stipulated. In absolute guaranties, this form of acceptance is usually held to be all that is necessary to bind the guarantor unless he stipulates expressly for notice of acceptance.1 It is said that it will be presumed that the guarantor intends to stipulate for acceptance by due notice; but that the terms of the offer or the conduct of the parties may show that he intends to waive such notice.2 If a spe-
7 Reif v. Paige, 55 Wis. 496, 42 Am. Rep. 731, 13 N. W. 473.
1 United States. Davis v. Wells, 104 U. S. 159, 26 L. ed. 686.
California. London, etc., Bank v. Parrott, 125 Cal. 472, 73 Am. St. Rep. 64, 58 Ac. 164; Scribner v. Schenkel, 128 Cal. 250, 60 Ac. 860.
Florida. Ferst v. Blackwell, 39 Fla. 621, 22 So. 892.
Georgia. Rogers v. Burr, 105 Ga. 432, 70 Am. St. Rep. 50, 31 S. E. 438; Manry v. Waxelbaum Co., 108 Ga. 14, 33 S. E. 701.
Indiana. Snyder v. Click, 112 Ind. 293, 13 X. E. 581; Wright v. Griffith, 121 Ind. 478, 23 N. E. 281, 6 L. R. A. 639. Iowa. Case v. Howard, 41 la. 479. Kentucky. Baker v. Warehouse Co., 90 Ky. 419, 14 S. W. 410; J. B. Watkins Medical Co. v. Brand, 143 Ky. 468, 33 L. R. A. (N.S.) 960, 136 S. W. 867; Hall's Executor v. Bank, 65 S. W. 365, 23 Ky. L. Rep. 1450.
Louisiana. People's Bank v. Lemarie, 106 La. 429, 31 So. 138.
Massachusetts. Bishop v. Eaton, 161 Mass. 496, 37 N. E. 665; Lynn Safe cial relationship exist3 between the guarantor and the debtor,3 as where the guarantor is a director in the debtor corporation,4 such relationship will show that the guarantor is to be charged with knowledge of the amount of debts which are contracted in reliance upon such guarantee; and that he is not entitled to notice of such acceptance.5 An offer of guaranty which provides, "I want you to sell him a bill of goods on the best terms you can afford: I will guarantee the payment of every dollar," is absolute and needs no acceptance other than by extending credit.6 An absolute guaranty may be binding without notice, though an accompanying agreement to buy stock is invalid for want of acceptance.7 If notice of having accepted such a guaranty must be given to the guarantor, in order to enable him to protect himself as against the primary debtor, the actual knowledge on the part of the guarantor that his offer of guaranty has been accepted by extending credit, is equivalent to notice and dispenses therewith.8 Thus if a guaranty can be accepted by extending credit to the party guaranteed, knowledge of the extension of credit, no matter how acquired is notice to the guarantor of the acceptance of his offer.9 Under an offer, which provides that the offeror hereby guarantees a bill, and will pay it upon presentation to him, if it is not paid by the principal debtor within six months from date, notice of acceptance must be given
Deposit & Trust Co. v. Andrews, 180 Mass. 527, 62 N. E .1061.
Mississippi. Richmond Paper Co. v. Bradley, 115 Miss. 307, L. R. A. 1918E, 123, 75 So. 381.
Missouri. Pearsell Mfg. Co. v. Jeffreys, 183 Mo. 386, 105 Am. St. Hep. 496, 81 S. W. 901.
Nebraska. Standard Oil Co. v. Hoese, 57 Neb. 665, 78 N. W. 292.
New Hampshire. Beebe v. Dudley, 26 N. H. 249, 59 Am. Dec. 341; Bank v. Sinclair, 60 N. H. 100, 49 Am. Rep. 307.
New York. Union Bank v. Coster, 3 N. Y. 203, 53 Am. Dec. 280.
Ohio. Powers v. Bumcratz, 12 O. S. 273; Wise v. Miller, 45 O. S. 388, 14 N. E. 218.
Tennessee. Yancey v. Brown, 35 Tenn, (3 Sneed) 89.
Utah. Wells, etc., Co. v. Davis, 2 Utah 411.
See also, Notice of Acceptance in Contracts of Guaranty, by W. P. Rogers, 5 Columbia Law Review, 215.
2 Pearsell Mfg. Co. v. Jeffreys, 183 Mo. 386, 105 Am. St Rep. 496, 81 S. W. 901.
3 Hibernia Bank & Trust Co. v. Can-cienne, 140 La. 969, L. R. A. 1917D, 402, 74 So. 267.
4 Hibernia Bank & Trust Co. v. Can-cienne, 140 La. 969, L R. A. 1917D, 402, 74 So. 267.
5 Hibernia Bank & Trust Co. v. Can-cienne, 140 La. 969, L. R. A. 1917D, 402, 74 So. 267.
6 Yancey v. Brown, 35 Tenn. (3 Sneed) 89. An offer of guaranty which provides, "You need not hesitate to extend credit and all the orders I have so far sent in are old customers of mine, and I know they are all O K, and any I sell I am willing to guarantee payments of their bill," is absolute, and is accepted by extending credit. Richmond Paper Co. v. Bradley, 115 Miss. 307, L. R. A. 1918E, 123, 75 So. 381.
7 Rogers v. Burr, 105 Ga. 432, 70 Am. St. Rep. 50, 31 R. E. 438.
8 First National Bank v. Carpenter, 41 la. 518; Greer Machinery Co. v. Sears (Ky.), 66 S. W. 521, 23 Ky. Law Rep. 2025; Bascom v. Smith, 164 Mass. 61, 41 N. E. 130. "Knowledge, no matter how acquired, is held to be notice, and it may be inferred from facts and circumstances warranting such a conclusion": German Savings Bank v. Roofing Co., 112 la. 184, 88 Am. St. Rep. 335, 51 L. R. A. 758, 83 N. W. 960.
9 German Savings Bank v. Roofing Co., 112 la. 184, 88 Am. St. Rep. 335, 51 L. R. A. 758, 83 N. W. 960: Greer Machinery Co. v. Sears, 66 S. W. 521, 23 Ky. Law Rep. 2025; Lynn, etc., Co. v. Andrews, 180 Mass. 527, 62 N. E. 1061; Peoria Rubber Mfg. Co. v. During, 85 Mo. App. 131.
"within reasonable time in order to hold the guarantor.10 If A offers to indemnify B against the consequences of doing a certain act, B's performance of such act is an acceptance, although notice thereof is not given to A.11
An offer by A to B, by which A agrees to pay to B a certain sum of money if B constructs a building upon B's property and which is to belong to B, at a place which A designates, may be accepted by B's act in constructing such building in a reasonable time, although no promise to construct such building was made, and although no notice was given that such building was made under construction.12 If A makes an offer to the general public to compensate anyone who would take care of A's son X,' such offer can be accepted by B's act in taking care of X, in reliance upon A's offer, although B does not notify A of his acceptance.13 An offer under seal to repay to the offeree certain amounts if he would pay a note at maturity, may be accepted by his paying such note, an acceptance under seal not being necessary.14 An offer by A, to be accepted by B's forbearing to sue X, without any provision as to the time for which such suit is to be forborne, is accepted by B's forbearance for a reasonable time.15