Kempner v. Cohn
47 Ark. 519. (1886)
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Rule of Law:
An acceptance of an offer is effective upon dispatch by the offeree (the 'mailbox rule'), and a contract is formed at that moment, provided the acceptance is made within a reasonable time and before the offeree receives any notice of the offer's revocation. A revocation of an offer is effective only upon receipt by the offeree.
Facts:
- On January 30, 1885, J. Kempner mailed a letter from Hot Springs to M. M. Cohn in Little Rock, offering to sell a specific lot for $10,000.
- Cohn received Kempner's offer letter on February 2.
- On February 5, Cohn told Kempner's uncle, A. Kempner, who was not an authorized agent for the sale, that he would accept the offer.
- On February 7, after being informed by his uncle that Cohn was making arrangements, Kempner mailed a letter to Cohn revoking the offer.
- Later on February 7, before receiving Kempner's revocation, Cohn mailed a letter to Kempner formally accepting the offer.
- Cohn's acceptance letter reached Kempner on February 9.
- Upon receiving the acceptance, Kempner refused to convey the property, asserting that he had already withdrawn the offer.
Procedural Posture:
- M. M. Cohn sued J. Kempner in a trial court for breach of an alleged contract to convey real property.
- The case was tried before a jury, which found in favor of Cohn and awarded him $611.50 in damages.
- Kempner (as appellant) filed a motion for a new trial, which was denied, and he subsequently appealed the judgment against him to the state's highest court.
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Issue:
Does a binding contract form when an offeree mails a letter of acceptance after the offeror has mailed a letter of revocation, but before the offeree has received that revocation?
Opinions:
Majority - Smith, J.
Yes. A binding contract is formed at the moment the offeree dispatches their acceptance, rendering a subsequently received revocation ineffective. The court applied the well-established 'mailbox rule,' which states that a contract is completed the moment a letter accepting an offer is posted, provided it is done within a reasonable time and before the offeree receives any notice that the offer has been withdrawn. A revocation is legally ineffective until it is communicated to the offeree. In this case, Cohn mailed his acceptance on February 7, before he received Kempner's letter of revocation, which was also mailed on February 7. Therefore, a contract was formed upon Cohn's mailing of the acceptance, and Kempner's attempted revocation was too late. The court also held that the five-day period between Cohn's receipt of the offer and his acceptance was a 'reasonable time' for a real estate transaction.
Analysis:
This case serves as a classic affirmation of the mailbox rule and clarifies the critical timing distinction between acceptance and revocation. The decision establishes that acceptance is effective on dispatch, while revocation is effective only upon receipt. This rule provides certainty for the offeree, who can rely on the existence of a contract from the moment they manifest their assent, without needing to wait for the acceptance to be received. This holding reinforces the objective theory of contract formation, prioritizing the parties' outward manifestations of agreement over their uncommunicated intentions.
