§ 23 NECESSITY THAT MANIFESTATIONS HAVE REFERENCE TO EACH OTHER

It is essential to a bargain that each party manifest assent with reference to the manifestation of the other.

COMMENTS & ILLUSTRATIONS:

Comment:

a. Mutuality of assent. Two manifestations of willingness to make a bargain, though having the same terms, do not constitute a bargain unless each is made with reference to the other. Ordinarily one party, by making an offer, assents in advance; the other, upon learning of the offer, assents by accepting it and thereby forms the contract. The offer may be communicated directly or through an agent; but information received by one party that another is willing to enter into a bargain is not necessarily an offer. The test is whether the offer is so made as to justify the accepting party in a belief that the offer is made to him.

Illustration:

1. A advertises in a large New York newspaper that he will pay a specified reward to anyone who will give him certain information within one year. B sees a copy of this advertisement in a Tokyo newspaper, correctly translated into Japanese, and sends A the information within the year. There is a contract.

b. Unintended appearance of mutual assent. Either the offeror or the offeree may be bound by an unintended appearance of assent created by his intentional conduct. See § 19. The mutual reference required by this Section is ordinarily intended by both parties to a contract, but if one party believes that there is such reference and the other knows that his conduct creates that appearance, the requirement is satisfied. Similarly, if one party believes that there is such reference and has no reason to know that the other has a different understanding, the requirement is satisfied if the other has reason to know that his conduct creates the unintended appearance. Section 20. Thus where an offer is contained in a writing either the offeror or the offeree may, without reading the writing, manifest assent to it and bind himself without knowing its terms. Again, where goods are sent by a seller as an offer to a buyer, the buyer, without examining them or knowing precisely what they are or that a bargain is proposed, can bind himself by accepting the goods. So in many cases usages of business or of local exchanges are annexed as terms to an offer, and an offeror or offeree who should be aware of those terms may be bound in accordance with them if he manifests assent. See §§ 219-23; Uniform Commercial Code §§ 1-205, 2-104.

c. Unknown offers of rewards. Obligations arising from unintended manifestations of assent by an offeree are imposed in order to protect the offeror in justifiable reliance on the offeree's promise. If the offer clearly contemplates no commitment by the offeree, so that no binding return promise can be made and justifiable reliance by the offeror is impossible, this reason disappears. Thus if a general offer of reward to anyone who does a certain act or achieves a certain result is treated as contemplating a bargain, the only expectations to be fulfilled are those of the offeree, and he may have none unless he knows of the offer. Such an offer is commonly interpreted as intended to induce action by people who know of the reward. A person who acts without such knowledge is then not within the terms of the offer, even though he intends to accept any offer which may be outstanding and thus does not act gratuitously. Standing offers of rewards made by governmental bodies, however, may be regarded as intended to create a climate in which people do certain acts in the hope of earning unknown rewards. Theoretically, an act so done might create a bargain, but recovery of the reward can be justified just as well by treating the offer as a promise binding without mutual assent or consideration or as creating a non-contractual obligation.

Illustrations:

2. A advertises that he will give a specified reward for certain information, or writes B a similar proposal. B gives the information in ignorance of the advertisement, or without having received the letter. There is no contract enforceable as a bargain.

3. A city ordinance provides that a standing reward of $ 1000 will be paid for information leading to the arrest and conviction of anyone guilty of arson within the city limits. A furnishes such information. A is entitled to the reward whether or not he knew of the reward or was motivated by hope of reward.

d. Cross offers. Cases have occurred in which identical offers have crossed in the mails. Such an event is unusual, and the ordinary offer does not manifest assent to the formation of a contract in this way. Hence, neither offer accepts the other, and there is no contract unless one of the parties accepts the offer he has received. This is a matter of interpretation; theoretically, just as the offeror may assent in advance to an acceptance, so each of two offerors could assent in advance to a cross-offer. Such assent is rare, but it may be inferred where both parties think a contract has already been made. The use of a cross-offer to assist in the interpretation of a previous offer should be distinguished.

Illustrations:

4. A sends B an offer through the mail to sell A's horse for $ 500. While this offer is in the mail, B, in ignorance thereof, mails to A an offer to pay $ 500 for the horse. There is no contract.

5. After negotiations through a broker, A writes B a letter purporting to confirm a contract for the sale of cloth. A's letter crosses in the mail a similar letter from B, which differs as to quantity and time of payment. A replies insisting on the quantity stated in his first letter but otherwise agreeing; B replies insisting on the time of payment stated in his first letter but otherwise agreeing. The two replies cross in the mail. There is a contract.

6. A offers by letter to sell goods to B, stating no definite time limit for acceptance. B accepts by letter after what might or might not be more than a reasonable time. The acceptance crosses a letter from A stating that he has not heard from B and that A's offer will terminate if B does not reply by return mail. There is a contract.

e. Acceptance of unknown terms. An offeree, knowing that an offer has been made to him, need not know all its terms. Knowing that an offer has been made, he can accept without investigation of the exact terms, either intentionally or by words or conduct creating an unintended appearance of intention to accept. The governing principles are the same as those for unrecognized offers, explained in Comment b.

Illustration:

7. A sends to B an offer to sell a specified lot for $ 5,000, also stating terms as to time of payment, mortgage security, taxes and insurance. B is so anxious to buy the lot that, without reading any of these additional terms, he sends to A an unconditional acceptance. There is a contract on the terms stated in A's offer.