Cole-McIntyre-Norfleet Co. v. Holloway

Brief Fact Summary.

Plaintiff ordered fifty barrels of meal from Defendant. When Plaintiff asked for delivery of the order Defendant claimed that it never accepted Plaintiff’s offer. Plaintiff sued Defendant to recover the excess price of the meal it ordered because the price had sharply risen from the time that Plaintiff placed the order and asked for delivery. The trial court held in favor of Plaintiff. The court of appeals affirmed. Defendant appealed.

Synopsis of Rule of Law.

When the subject of a contract, either due to its nature or to market conditions, will become unmarketable by delay, one party’s unreasonable delay in notifying another party of its acceptance of the second party’s offer constitutes an act of acceptance sufficient to form a valid contract.

Facts.

On March 26, 1917, a salesman employed by Cole-McIntyre-Norfleet Co. (Defendant) visited Holloway’s (Plaintiff) store and successfully solicited an order from Plaintiff for fifty barrels of meal, a perishable good. Defendant provided that Plaintiff had until July 31, 1917 to request delivery of the meal, and would be charged for storage of any barrels not requested by this time. Defendant’s salesman visited Plaintiff’s store once a week every week following Plaintiff’s order but never mentioned the order during these visits. On May 26, 1917, Plaintiff requested delivery of the barrels from Defendant. However, Defendant informed Plaintiff that it had never accepted his order and thus no contract existed. Between March 26, when the order was placed, and May 26, when Plaintiff requested delivery, the prices for meal significantly increased. Plaintiff sued to recover the excess in price in Tennessee state court. The circuit court and court of appeals both held that Defendant’s unreasonable delay in informing Plaintiff that it did not accept the order actually amounted to acceptance itself, and thus a valid contract was formed. Defendant appealed.

Issue.

Whether one party’s unreasonable delay in notifying another party of its acceptance of the second party’s offer constitutes an act of acceptance sufficient to form a valid contract.

Held.

Yes. The court of appeals’ ruling is affirmed and Defendant’s petition to rehear the case is denied. When the subject of a contract, either due to its nature or to market conditions, will become unmarketable by delay, one party’s unreasonable delay in notifying another party of its acceptance of the second party’s offer constitutes an act of acceptance sufficient to form a valid contract.

Discussion.

Defendant’s delay in notifying Plaintiff of its refusal to accept Plaintiff’s offer is unreasonable due to the perishable nature of the subject of the offer, and thus constitutes an act of acceptance sufficient to form a valid contract. When the subject of a contract, either due to its nature or to market conditions, will become unmarketable by delay, one party’s unreasonable delay in notifying another party of its acceptance of the second party’s offer constitutes an act of acceptance sufficient to form a valid contract. This especially applies when a wholesale merchant of perishable goods solicits orders for such goods from customers and fails to notify those customers within a reasonable time that their orders are not accepted. When the wholesaler is silent on the issue of acceptance for an unreasonably long period of time, customers may infer acceptance from this silence. Defendant directed its salesman to solicit an order for perishable meal from Plaintiff. After the order was placed, Defendant’s salesman had weekly opportunities to notify Plaintiff the order was not accepted due to his weekly visits to Plaintiff’s store. Additionally, Defendant could have notified Plaintiff of its rejection of the order any time through the mail. Defendant’s silence on the issue of acceptance for sixty days despite having ample opportunities to communicate its rejection to Plaintiff constitutes an unreasonable delay in communicating its acceptance or rejection given the perishable nature of the ordered goods. Plaintiff may infer acceptance from Defendant’s silence. This acceptance is sufficient to form a valid contract.