Prescott v. Jones
69 N.H. 305, 41 A. 352 (1898)
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Rule of Law:
An offeror cannot unilaterally impose a contract on an offeree by framing an offer to treat silence as acceptance; a binding contract requires an overt act of acceptance and mutuality of obligation.
Facts:
- The defendants, an insurance company, sent the plaintiff a letter offering to renew an insurance policy on his buildings.
- The defendants' offer stated they would issue the policy and consider it accepted unless the plaintiff notified them to the contrary.
- Upon receiving the letter, the plaintiff made a mental determination to accept the offer for insurance.
- The plaintiff never communicated his acceptance, either verbally or in writing, to the defendants.
- The plaintiff did not pay a premium or provide any other consideration for the proposed renewal policy.
- Subsequently, the plaintiff's buildings were destroyed by fire, and he sought payment from the defendants under the purported policy.
Procedural Posture:
- The plaintiff filed a lawsuit against the defendants in a trial court to enforce an alleged insurance contract.
- The defendants responded by filing a demurrer, arguing that the facts alleged by the plaintiff, even if true, did not create a legally enforceable contract.
- The trial court considered the defendants' demurrer.
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Issue:
Does an offeree's silence and uncommunicated mental determination to accept constitute a valid acceptance of an offer, even when the offer states that silence will be treated as acceptance, thereby creating an enforceable contract?
Opinions:
Majority - Blodgett, J.
No. An offeree's silence and uncommunicated mental decision do not constitute a legally binding acceptance, even if the offeror stipulates that silence will be deemed acceptance. For a contract to be formed, acceptance must be manifested by an overt act. The court reasoned that an offeror cannot compel an offeree to act or be bound by their silence, as a person has no obligation to reply to an unwanted proposition. Acceptance requires 'words, written or spoken, or some other overt act.' Furthermore, contracts require mutuality; since the plaintiff was not bound by his silence (he could not be sued for the premium), the defendants could not be bound either. The court also found no consideration, as the plaintiff had not paid or promised to pay a premium, rendering the defendants' offer a mere gratuitous promise. Finally, the doctrine of estoppel was inapplicable because the defendants' offer was a statement of future intent, not a statement of existing fact upon which the plaintiff could reasonably rely.
Analysis:
This decision solidifies the fundamental contract law principle that acceptance must be an affirmative, communicated act, reinforcing the objective theory of contract formation. It establishes a critical limitation on the power of the offeror, preventing them from imposing a duty on an offeree to affirmatively reject an offer to avoid being bound. The case serves as a foundational example of why silence, absent a prior course of dealing or other special circumstances, generally does not constitute acceptance. It clearly distinguishes a mere uncommunicated mental assent from the overt manifestation of mutual agreement required to form an enforceable contract.
