Minneapolis & St. Louis Railway Co. v. Columbus Rolling-Mill Co.
119 U.S. 149 (1886)
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Rule of Law:
An acceptance of an offer must be on the exact terms proposed by the offeror; a reply that varies the terms of the original offer constitutes a counteroffer, which operates as a rejection of the original offer and terminates the power of acceptance.
Facts:
- On December 8, the defendant sent a letter to the plaintiff offering to sell between 2,000 and 5,000 tons of iron rails at a specified price.
- The defendant's offer stated that if the plaintiff accepted, it must notify the defendant prior to December 20.
- On December 16, the plaintiff responded via telegram and letter, directing the defendant to enter an order for 1,200 tons of rails on the same terms.
- On December 18, the defendant sent a telegram to the plaintiff, declining to fulfill the 1,200-ton order.
- On December 19, the plaintiff sent another telegram to the defendant attempting to accept the original offer for 2,000 tons of rails.
Procedural Posture:
- The plaintiff sued the defendant in a federal trial court to enforce an alleged contract.
- The case was tried before a jury, and a verdict was rendered for the defendant.
- The trial court entered a judgment in favor of the defendant.
- The plaintiff, as appellant, appealed the judgment to the U.S. Supreme Court.
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Issue:
Does a party's response to an offer, which purports to accept the offer but modifies the quantity of goods, constitute a valid acceptance that forms a binding contract?
Opinions:
Majority - Justice Gray
No. A response that varies the terms of an original offer is not an acceptance but a rejection. For a contract to be complete, there must be mutual assent, meaning the acceptance must be on the exact terms offered. The plaintiff's December 16 telegram and letter, ordering 1,200 tons instead of the offered 2,000 to 5,000 tons, was a qualified acceptance that constituted a counteroffer. This counteroffer was, in legal effect, a rejection of the defendant's original offer. Once the defendant declined the plaintiff's counteroffer on December 18, the negotiation was terminated. The plaintiff could not subsequently revive the defendant's original offer by attempting to accept it on December 19, because that offer no longer existed.
Analysis:
This case solidifies the common law's 'mirror image rule' for contract formation, which demands that an acceptance be an unconditional assent to the precise terms of the offer. The decision establishes that any deviation in the acceptance, such as a change in quantity, constitutes a counteroffer that terminates the original offer. This creates a clear, predictable, but strict standard for negotiations, providing certainty to parties about when a binding contract has been formed. Future commercial actors must be aware that proposing alternative terms forfeits their ability to later accept the original offer unless the offeror renews it.
