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Allen v. Bissinger & Co.

Supreme Court of Utah
219 P. 539 (1923)
ELI5:

Rule of Law:

The formation of a contract is judged by an objective standard; if a party's words and actions, reasonably interpreted, manifest an intention to agree, a binding contract is formed, regardless of that party's subjective, unexpressed intentions.


Facts:

  • The plaintiff, the official reporter for the Interstate Commerce Commission (ICC), sent a letter to the defendant, a freight shipper, offering to furnish copies of the official report of upcoming ICC hearings on freight classification.
  • The plaintiff's offer letter noted that the hearings would take place in several cities over a period of nearly two months.
  • The defendant responded by letter, stating: 'We will be interested in your official report of the different changes in the handling of freight and would ask you to put our name down for a copy of same.'
  • The plaintiff began preparing and shipping installments of the voluminous official hearing reports to the defendant.
  • After receiving a second shipment, the defendant wrote to the plaintiff attempting to cancel the order, stating they 'did not think we were going to get a full library' and that the material was not useful to them.
  • The plaintiff sent the remainder of the reports prepared up to the date of the attempted cancellation, which totaled 8,380 pages.
  • The plaintiff billed the defendant $1,047.50 for the reports, and the defendant refused to pay.

Procedural Posture:

  • The plaintiff filed an action at law against the defendant in a trial court to recover payment for the reports.
  • The case was tried before the court without a jury (a bench trial).
  • The trial court found in favor of the plaintiff and entered a judgment for the amount owed.
  • The defendant, as appellant, appealed the judgment to the present court.

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Issue:

Does a legally binding contract form when a party's written acceptance refers to the subject of the offer using slightly different descriptive language, if a reasonable person would understand the acceptance to be for the specific item offered?


Opinions:

Majority - Cherry, J.

Yes, a legally binding contract forms when a party's written acceptance, judged by a reasonable standard, manifests an intention to agree to the matter in question, irrespective of their unexpressed state of mind. The court reasoned that contract formation depends on the objective, outward expression of mutual assent, not a party's subjective intent. The plaintiff's offer was for a specific, identifiable item: the official report of the ICC hearings. The defendant's response, referring to 'your official report,' was reasonably understood as an acceptance of that specific offer, despite the slightly imprecise description that followed. The court found further support in the defendant's subsequent conduct; their initial complaints were about the volume and cost of the reports, not about receiving the wrong item, which indicated they understood what they had ordered but were merely disappointed with the bargain. The law will not relieve a party from an unprofitable or burdensome contract that resulted from their own improvidence, absent fraud or misrepresentation.



Analysis:

This case is a classic illustration of the objective theory of contract formation, which is a foundational principle in contract law. The decision emphasizes that a party's assent is measured by what a reasonable person in the other party's position would understand their words and actions to mean. It firmly rejects a subjective 'meeting of the minds' standard that would require a court to investigate the parties' actual, unexpressed intentions. This ruling provides certainty and predictability in commercial transactions, as parties can rely on the plain meaning of communications rather than worrying about undisclosed misunderstandings. It serves as a precedent that parties are bound by the reasonable implications of their communications and cannot escape a contract simply because it turned out to be less favorable than anticipated.

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