Fairmount Glass Works v. Crunden-Martin Wooden Ware Co.

Court of Appeals of Kentucky
106 Ky. 659 (1899)

ELI5:

Rule of Law:

A price quotation constitutes a binding offer when it is sent in response to a direct inquiry for a specific order and includes language, such as 'for immediate acceptance,' that demonstrates the sender's intent to be bound upon the recipient's acceptance.

Facts:

On April 20, 1895, Crunden-Martin Wooden Ware Co. wrote to Fairmount Glass Works asking for the 'lowest price' on an 'order for ten car loads of Mason green jars.'
On April 23, 1895, Fairmount responded with a letter quoting specific prices for different jar sizes and stating the terms were 'for immediate acceptance.'
On April 24, 1895, Crunden-Martin sent a telegram to Fairmount accepting the offer, stating: 'Enter order ten car loads as per your quotation. Specifications mailed.'
Shortly thereafter on the same day, Fairmount sent a telegram back to Crunden-Martin stating: 'Impossible to book your order. Output all sold.'
The mailed specifications from Crunden-Martin, which Fairmount received after its refusal, included the term 'The jars and caps to be strictly first-quality goods.'

Procedural Posture:

Crunden-Martin Wooden Ware Co. sued Fairmount Glass Works in a trial court for breach of contract.
The trial court entered a judgment in favor of Crunden-Martin.
Fairmount Glass Works, the appellant, appealed the trial court's judgment to the reviewing appellate court, where Crunden-Martin is the appellee.

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Issue:

Does a letter stating prices per unit, which includes the phrase 'for immediate acceptance' and is sent in response to an inquiry for an order of a specific quantity, constitute a binding offer to sell?

Opinions:

Majority - Judge Hobson

Yes. A letter quoting prices in response to a specific inquiry for an order, which contains language indicating that a prompt reply is sought, is a binding offer, and its acceptance creates a valid contract. The court determined the true meaning of the correspondence by reading it as a whole. Crunden-Martin's initial letter was not a general inquiry but a specific one about an 'order for ten car loads,' indicating a desire to purchase. Fairmount's reply, particularly the phrase 'for immediate acceptance,' transformed what might have been a mere price quotation into a definite offer to sell on the stated terms. This language clearly signaled an intent to be bound if the offer was accepted promptly. Therefore, when Crunden-Martin accepted via telegram, a contract was formed, and Fairmount's subsequent attempt to withdraw was ineffective. The court also dismissed Fairmount's arguments that the acceptance was invalid, finding that 'first-quality goods' was a standard trade term and that 'ten car loads' was a sufficiently definite quantity in the industry.

Analysis:

This case is a foundational decision in contract law, illustrating the distinction between a non-binding price quotation and a binding offer. It establishes that the court will look at the totality of the circumstances, including the language used and the context of the correspondence, to determine the parties' objective intent. The ruling emphasizes that specific phrases like 'for immediate acceptance' can elevate a communication from a mere invitation to negotiate into a firm offer. This precedent guides future courts in analyzing commercial communications and reinforces the principle that an offeror is the master of their offer, but their language will be interpreted as a reasonable person would understand it.

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