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Minnesota Linseed Oil Co. v. Collier White Lead Co.

District Court
F. Cas. 447 (1876)
ELI5:

Rule of Law:

When an offer is made for the sale of a commodity with a volatile and fluctuating price, an acceptance is not made within a reasonable time if it is delayed in a manner that allows the offeree to speculate on market changes at the offeror's expense.


Facts:

  • The plaintiff sent the defendant an offer by telegraph to sell linseed oil.
  • The price of linseed oil was subject to sudden and great fluctuations in the market.
  • The defendant received the plaintiff's telegraphed offer.
  • The defendant did not immediately reply to the offer.
  • On the morning of Tuesday, August 3rd, the defendant deposited a dispatch at the telegraph office accepting the plaintiff's offer.
  • The plaintiff argued that the defendant's delay in accepting was unreasonable.

Procedural Posture:

  • The plaintiff, Minnesota Linseed Oil Co., filed a suit against the defendant, Collier White Lead Co., in the U.S. Circuit Court for the District of Minnesota (a federal trial court).
  • The defendant asserted a counterclaim against the plaintiff.
  • The case was submitted to the district judge for a final decision on the merits of the claim and counterclaim.

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Issue:

Does a telegraphed acceptance of an offer to sell a commodity with a volatile price, sent the day after the offer was received, constitute a valid acceptance within a reasonable time?


Opinions:

Majority - Nelson, District Judge

No. A telegraphed acceptance of an offer for a commodity with a volatile price, sent the day after the offer was received, is not an acceptance within a reasonable time. The court first affirmed the 'mailbox rule' for telegraphic communication, establishing that an acceptance is effective when the dispatch is deposited for transmission. However, the central issue is whether this acceptance occurred within a reasonable time. What constitutes a 'reasonable time' depends on the circumstances of the negotiation and the subject matter of the contract. For a commodity like linseed oil, which is subject to 'sudden and great fluctuations in the market,' the time for acceptance is extremely short. The plaintiff's use of a telegraph for the offer implied an expectation of an immediate reply. The defendant's delay was 'manifestly unjust' because it afforded the defendant an opportunity to monitor the market and accept or refuse the offer based on whether the price change would be to its advantage, effectively speculating at the plaintiff's risk.



Analysis:

This decision refines the concept of a 'reasonable time' for acceptance in contract law, tying it directly to the nature of the subject matter. It establishes the principle that for goods with volatile prices, the duration of an offer's validity is very short, and an acceptance must be nearly immediate. This precedent protects offerors from being bound by outdated prices while offerees wait to capitalize on market fluctuations. The case is a cornerstone in teaching how the context and subject of a contract dictate the application of general contract formation rules.

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