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Counteroffers

Case: Minneapolis & St. Louis Rail Co. v. Columbus Rolling Mill Co., 119 U.S.
149 (US, 1886) pg. 325

Parties: Plaintiff - Minneapolis (RR co)


Defendant - Columbus (Rolling mill co)

Procedural History: Plaintiff sues for breach of contract, alleging a contract


was formed, but def denies a contract was formed. Trial court returns verdict for
defendant, plaintiff appeals.

Facts: · 12/5: Railway company (Plaintiff) sends mill company (Def) letter
requesting iron/steel rails.
· 12/8: Def responds with letter clarifying that it only makes iron
rails. It offers to supply 2K-5K tons of iron rails at $54 per ton. Requests
notification by 12/20.
· 12/16: P “accepts” and orders 1,200 tons at $54.
· 12/18: D rejects.
· 12/19: P tries to go back to old offer, agrees to 2K at $54. Reiterates
at 12/22.
Plaintiff sues for breach of contract, alleging a contract was formed, but def
denies a contract was formed. Trial court returns verdict for defendant,
plaintiff appeals.

Issue: Does the original offer remain valid after a counteroffer is


communicated? No.

Holding: Judgment affirmed for defendant.

Reasoning: A counteroffer, which is a proposal to accept the offer made with


different terms, constitutes a rejection of the original offer and subject to
acceptance by the original offeror. The original offeree, after rejecting the
offer with a counteroffer, cannot afterward accept the offer once its been
rejected (cannot be revived). Also, there was a time limit to the original offer,
and the acceptance was received after the date specified. If no time limit is
mentioned in the offer, then a reasonable time period will be assumed.

RULE: Mirror-Image rule- acceptances must be the mirror image of offers; if not,
they are considered counteroffers and destroy the offer.
Note: This rule is rarely used now.
Restatement (Second) § 59 states that an offer is not invalidated if the
acceptance merely requests a change in terms.

Restatement § 29 - An offeree's power of acceptance is terminated by his making


of a counter-offer, unless the offeror has manifested a contrary intention or
unless the counter-offer manifests a contrary intention of the offeree.

Notes

UCC (not in effect during this case) - abolishes the mirror image rule in the
common law, as it pertain to the sale of goods.
What is the issue here? Sale of goods - iron rails for RR tracks - these are
goods. The issue is the qty of tons of goods
Supreme Court decided negotiations were closed once the def rejected plaintiff's
counteroffer. Counteroffer kills the offer here.
UCC 2-207 -

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