Hoover Motor Exp. Co., Inc. v. Clements Paper Co.

Supreme Court of Tennessee
241 S.W.2d 851 (1951)

ELI5:

Rule of Law:

An offer may be revoked when the offeror communicates to the offeree, through words or actions, an intent that is inconsistent with the offer's continuation, even without an express statement of revocation.

Facts:

On November 19, 1949, Hoover Motor Express Company, Inc. made a written offer, without consideration, to Clements Paper Company to purchase certain real estate.
In December 1949, Clements' Vice-President, Mr. Williams, was authorized to accept the offer but delayed doing so, hoping to negotiate additional terms such as an easement.
On January 13, 1950, Williams telephoned Hoover to discuss the transaction.
During the call, Hoover told Williams, 'Well, I don’t know if we are ready. We have not decided, we might not want to go through with it.'
Hoover also informed Williams that 'they had other plans in mind' and he was 'not sure if he was going through with the original proposition.'
On January 20, 1950, Clements Paper Company sent a formal written acceptance of the November 19 offer to Hoover.
After receiving the acceptance, Hoover refused to proceed with the purchase.

Procedural Posture:

Clements Paper Company (plaintiff) filed suit against Hoover Motor Express Company, Inc. (defendant) in the Chancery Court (trial court), seeking specific performance or damages.
The Chancellor found in favor of Clements Paper Company.
Hoover Motor Express Company, Inc. (appellant) appealed the decision to the Court of Appeals of Tennessee (intermediate appellate court).
The Court of Appeals affirmed the Chancellor's decree.
Hoover Motor Express Company, Inc. (petitioner) petitioned the Supreme Court of Tennessee (state's highest court) for a writ of certiorari, which was granted.

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Issue:

Does an offeror's statement to an offeree that they 'might not want to go through with it' and have 'other plans' constitute an effective revocation of the offer before acceptance?

Opinions:

Majority - Mr. Justice Tomlinson

Yes, the offeror's statements constituted an effective revocation. An offer is effectively revoked if the offeror communicates to the offeree an intent that is inconsistent with the offer remaining open, and this communication is received before acceptance. Express notice of withdrawal is not required; it is sufficient that the offeree has knowledge of the offeror's conduct manifesting an intent to no longer be bound. In this case, Hoover’s statements that they might not go through with the deal and had other plans clearly implied to Williams that the offer was no longer firm. Williams’ own testimony and his subsequent actions confirm he understood Hoover no longer consented to the transaction, which terminated his power of acceptance before he sent the letter on January 20.

Analysis:

This case clarifies the standard for revocation of an offer in Tennessee, aligning it with the majority rule in American contract law. It establishes that an offeree's power of acceptance is terminated once they receive knowledge of the offeror's conduct or statements that are inconsistent with an intent to contract. The ruling emphasizes an objective standard, preventing an offeree from 'snapping up' an offer they know the offeror is reconsidering. This precedent solidifies the principle that the 'meeting of the minds' must exist at the moment of acceptance for a contract to be formed.

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