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Case Comments Washington and Lee Law Review Volume 14 | Issue 2 Article 4 Fall 9-1-1957 Case Comments Follow this and additional works at: https://scholarlycommons.law.wlu.edu/wlulr Recommended Citation Case Comments, 14 Wash. & Lee L. Rev. 220 (1957), https://scholarlycommons.law.wlu.edu/wlulr/ vol14/iss2/4 This Comment is brought to you for free and open access by the Washington and Lee Law Review at Washington & Lee University School of Law Scholarly Commons. It has been accepted for inclusion in Washington and Lee Law Review by an authorized editor of Washington & Lee University School of Law Scholarly Commons. For more information, please contact [email protected]. 220 WASHINGTON AND LEE LAW REVIEW [Vol. XIV CASE COMMENTS CONTRACT s-AcCEPTANCE OF OFFER BY FAILURE TO NOTIFY OFFEROR OF REJECTION. [Federal] It is a popular maxim that silence implies assent, or as Oliver Goldsmith once stated, "silence gives consent."u Since the development of the contract as a legal instrument, there have been repeated attempts to gain contractual advantages by asserting as a comparable legal rule that failure to express a rejection of an offer may constitute an accept- 3 ance of it.2 The recent case of Russell v. The Texas Company stands as one of the relatively infrequent instances in which this contention has been upheld in the courts. Plaintiff was the owner of certain prop- erty (referred to as section 23) in which defendant owned the mineral rights and had the right to use such of the surface as might be necessary for the mining of minerals. During 1952, defendant had been con- ducting extensive mining operations on section 23, and also had been using the surface of section 23 in connection with mining operations on lands other than that section. On October 30, 1952, plaintiff sent defendant an offer for a revocable license to cover the use of section 23 in connection with mining operations on adjacent lands for $150 per day, the offer stating expressly that "your continued use of the road- way, water and/or materials will constitute your acceptance of this revocable license."4 Without making any response, defendant continued to use section 23 until November 22, 1952, and in December, 1952, defendant sent plaintiff a rejection of the offer. In an action for dam- ages for use of the surface, the district court5 found that plaintiff's offer for a revocable license had been accepted by defendant, and accord- ingly, plaintiff was awarded $150 per day from the receipt of the offer by defendant to the time defendant ceased his wrongful conduct, to- gether with damages for the use and occupancy of plaintiff's property during that time.6 The Court of Appeals for the Ninth Circuit affirmed 'Goldsmith, "The Good Natured Man," Act II. 2Such assertions have given rise to confusion in the law of contracts, the courts being faced with a situation similar to the truism of Paulus in the Pandects of Jus- tinian: "He who remains silent certainly does not speak; but nevertheless it is true that he does not deny." Digest, L, 17, 142 (Paulus). '238 F. (2d) 636 (C. A. 9th, 1956). '238 F. (2d) 636, 641 (C. A. 9th, 1956). 5United States District Court for the District of Montana. 0The damages for use and occupancy which plaintiff sought were not in the nature of double compensation with the $x5o per day, but rather were due under the 19571 CASE COMMENTS 221 the finding that defendant's use of section 23 was tortious and that defendant's conduct amounted to an acceptance of the offer for a re- vocable license.7 By way of dictum, the court indicated that there still would have been a valid contract formed here had defendant's conduct not been tortious. "But even in the absence of a tortious use, the true test would be whether or not the offeror was reasonably led to believe that the act of the offeree was an acceptance, and upon the facts of this case it seems evident that even this test is met."8 Contrary to the implications of the principal decision, it may be stated as a general rule that an offeror cannot bind the offeree by a stipulation that silence or inaction on the part of the offeree will con- stitute an acceptance of the offer.9 Of course, that rule does not cover the distinguishable situation in implied-in-fact contract cases, where the obligations of the parties arise "from mutual agreement and in- tent to promise but where the agreement and promise have not been expressed in words."'10 In that situation, meaning is given to the acts of the parties "in relation to the previous usage and conduct of men." 11 But where the silence of the offeree is alleged to amount to an accept- ance of the offer, the offeree's conduct, including his silence, has no standard by which its effect can be measured, because it is unique to terms of the mineral reservation for the use of section 23 in connection with mining operations on section 23. The Si5o per day was alleged by plaintiff as owing for the use of section 23 in connection with mining operations on adjacent lands. The court applied the rule of the Restatement of Contracts in finding the creation of a valid contract through acceptance by silence. "Where the offeree exercises dominion over things which are offered to him, such exercise of dominion in the absence of other circumstances showing contrary intention is an acceptance. If circumstances indicate that the exercise of dominion is tortious the offeror may at his option treat it as an acceptance, though the offeree manifests an intention not to accept." Restatements, Contracts (1932) § 72 (2). 82°38 F. (2d) 636, 643 (C. A. 9th, 1956). Note the apparent anomaly in the court's decision: If acceptance is to be found on the basis of silence, then how can the true test look to the act of the offeree? See further note 26, infra. 'Bank of Buchanan v. Continental Banks, 277 F. 385 (C. C. A. 8th, 1921); Ex- celsior Stove & Mfg. Co. v. Venturelli, 29o Ill. App. 502, 8 N. E. (2d) 702 (1937); Prescott v. Jones, 69 N. H. 305, 41 Atl. 352 (1898); Sell v. General Electric Supply Corp., 227 Wis. 242, 278 N. W. 442 (1938); 1 Corbin, Contracts (1950) § 72; 1 Willis- ton, Contracts (2nd ed. 1936) § 91; Simpson, Contracts (1953) § 31. "The proper infer- ence from failure to respond to a proposition of any kind is that it is rejected or declined. A party cannot be held to contract where there is no assent. Silence oper- ates as an assent, and creates an estoppel, only when it has the effect to mislead. There must be such conduct on the part of the [offeree] as would, if it were not estopped, operate as a fraud on the party who has taken, or neglected to take, some action to his own prejudice in reliance upon it." More v. New York Bowery Fire Ins. Co., 13o N. Y. 537, 29 N. E. 757, 758 (1892). 2 i Williston, Contracts (2nd ed. 1936) 8. nl Corbin, Contracts (195o) 34 222 WASHINGTON AND LEE LAW REVIEW [Vol. XIV the particular fact situation and there is no general "conduct of men" 2 upon which to interpret the offeree's silence as acceptance.' The cases rarely state any reasons for this general rule, but rather merely assert the proposition that there can be no contract formed unless there is an acceptance to the offer, and that silence on the part of the offeree is not acceptance of the offer.13 Apparently the true reason supporting the rule is so obvious that it is overlooked. A contract, being a voluntary undertaking imposing legal obligations on both parties, must necessarily require positive assent thereto. The offeror shows his positive assent to the contractual situation by making the offer, and the offeree must show his positive assent by affirmatively accepting the offer.' 4 Otherwise there would be no meeting of the minds of the parties on a specific subject matter and no mutual agree- ment thereto, and consequently no contractual obligations would result.15 There are certain situations, however, in which exceptions to the general rule have been made and silence on the part of the offeree held to constitute an acceptance of the offer. One writer 6 has put these situations into two main categories, one of which is relevant to the principal case: where the offeree has received the benefit of the goods or services offered.17 This category is subdivided into two situa- "Apart from contracts which do exist in fact, "courts recognize by the lan- guage of their opinions two classes of implied contracts. The one class consists of those contracts which are evidenced by the acts of the parties and not by their verbal or written words-true contracts which rest upon an implied promise in fact. The second class consists of contracts implied by law ... and not by the in- tentions of the parties. A contract cannot be implied in fact where the facts are in- consistent with its existence; or against the declaration of the party to be charged; or where there is an express contract covering the subject-matter involved; or against the intention or understanding of the parties; or where an express promise would be contrary to law." Miller v. Schloss, 218 N. Y. 400, 406, 113 N. E. 337, 338 (1916). Contracts implied in fact are not included within the scope of this comment.
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