Cole-McIntyre-Norfleet Co. v. Holloway
141 Tenn. 679 (1919)
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Rule of Law:
When an offeror sends its agent to solicit an offer, an unreasonable delay by the offeror in notifying the offeree of its rejection can operate as an acceptance, thus forming a binding contract.
Facts:
- On March 26, 1917, a traveling salesman for a wholesale seller solicited and received an order for goods, including fifty barrels of meal, from a country store owner (the buyer).
- The order form stipulated that it was not binding until accepted by the seller at its office, that the salesman had no authority to sign for the seller, and that the order could not be countermanded by the buyer.
- The seller's salesman continued to visit the buyer's store weekly after the order was placed but never mentioned the status of the order.
- The seller did not communicate an acceptance or a rejection of the order to the buyer.
- Between March 26 and May 26, 1917, the market price of the goods ordered increased by approximately fifty percent.
- On May 26, 1917, roughly two months after placing the order, the buyer visited the seller's place of business to request shipment of the meal.
- At that time, the seller informed the buyer that it had not accepted the March 26 order and therefore no contract existed.
Procedural Posture:
- The buyer (defendant in error) sued the seller (plaintiff in error) for breach of contract in the Circuit Court of Shelby County, Tennessee (trial court).
- The Circuit Court found for the buyer, holding that the seller's delay constituted acceptance and a contract had been formed.
- The seller appealed to the Tennessee Court of Civil Appeals (intermediate appellate court).
- The Court of Civil Appeals affirmed the judgment of the Circuit Court.
- The seller (as plaintiff in error) petitioned the Supreme Court of Tennessee (highest court) for a writ of certiorari to review the appellate court's decision.
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Issue:
Does a seller's unreasonable delay in communicating its rejection of an order, which was solicited by its own traveling salesman, constitute an acceptance of that order?
Opinions:
Majority - Mr. Chief Justice Lansden
Yes. An offeror's unreasonable delay in rejecting a solicited offer may be construed as an acceptance. The court reasoned that when a seller sends out an agent to solicit an offer, it creates a duty to act on that offer—either by accepting or rejecting it—within a reasonable time. Here, the buyer was bound by the terms of the order and could not countermand it, while the seller remained silent. This created an inequitable situation where the seller could wait and speculate on market changes at the buyer's expense. Given the sixty-day delay, the seller's ample opportunities to communicate, and the volatile nature of the goods' market, the seller's silence was unreasonable and therefore operated as an acceptance of the contract.
Analysis:
This case establishes a significant exception to the general contract law principle that silence does not constitute acceptance. It imposes a duty to speak upon a party who solicits an offer, particularly in a commercial context where market conditions are volatile. The decision prevents an offeror from unfairly using silence to speculate on market fluctuations while holding the offeree to their offer. Future courts will analyze the reasonableness of the delay and the relationship between the parties to determine if silence can form a binding contract.
