United States v. Braunstein
1947 U.S. Dist. LEXIS 1845, 75 F.Supp. 137 (1947)
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Rule of Law:
For a binding contract to be formed, an acceptance must be unequivocal and must comply exactly with the terms of the offer. A purported acceptance that contains a material clerical error, such as a mistake in the price, is not a valid acceptance but rather a rejection and counter-offer, especially when the offeree knows the offeror's words do not reflect their actual intent.
Facts:
- The Commodity Credit Corporation (CCC), a U.S. government instrumentality, issued an announcement inviting bids to purchase 9599 boxes of off-condition raisins.
- On August 3, 1945, Pearl Distilling Co. sent a telegram to the CCC offering to buy the raisins for "ten cents per pound."
- On August 9, 1945, the CCC sent a responsive telegram stating that it "accepts" the offer, but mistakenly listed the price as "10 cents per box."
- Each box contained twenty-five pounds of raisins, meaning the CCC's stated price was approximately 96% lower than the price offered by Pearl Distilling Co.
- Pearl Distilling Co. did not respond to the August 9 telegram or send any payment.
- On August 20, 1945, the CCC sent a telegram correcting the clerical error to "10 cents per pound" and requested confirmation.
- Pearl Distilling Co. again did not respond or take any action.
- After Pearl Distilling Co. failed to pay, the CCC sold the raisins to another buyer at a loss.
Procedural Posture:
- The United States sued Sidney Braunstein and Pearl Distilling Co. for breach of contract in a federal district court.
- The parties stipulated that the series of telegrams would constitute the contract, if one existed.
- Defendant Sidney Braunstein filed a motion for summary judgment, arguing no contract was ever formed.
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Issue:
Does a purported acceptance that contains a material mistake in a key term, such as price, constitute a valid acceptance that creates a binding contract?
Opinions:
Majority - Medina, District Judge
No. A purported acceptance that contains a material mistake in a key term is not a valid acceptance and does not create a binding contract. For a contract to be created, an acceptance must be 'unequivocal,' 'positive and unambiguous,' and 'must comply exactly with the requirements of the offer'—the mirror image rule. The CCC's telegram of August 9, which substituted 'ten cents per box' for 'ten cents per pound,' failed to meet this standard and was therefore not a valid acceptance. The court rejected the government's argument that the defendant knew it was a clerical error, citing the Restatement of Contracts § 71(c), which states, 'If either party knows that the other does not intend what his words or other acts express, this knowledge prevents such words or other acts from being operative as an offer or acceptance.' While courts have room to interpret terms within an existing contract, they are highly reluctant to reform offers and acceptances to create a contract where the parties failed to reach a clear agreement. The fault for the ambiguity lies with the CCC as the drafter of the flawed acceptance.
Analysis:
This case strongly affirms the traditional 'mirror image rule' of contract formation, emphasizing that an acceptance must precisely match the terms of the offer to create a binding contract. It clarifies that a party's knowledge of the other's subjective intent cannot cure a defective acceptance that is objectively ambiguous or contains a material error. The decision places the risk of clerical errors squarely on the party drafting the communication, reinforcing the principle that ambiguities are construed against the drafter. This precedent limits the judiciary's role in 'fixing' flawed negotiations, thereby promoting certainty and precision in commercial dealings at the formation stage.
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