How have the courts interpreted the clause "acceptance" and "cancellation at any time" in a contract?

MultiRegion, United States of America

The following excerpt is from Sylvan Crest Sand & Gravel Co. v. United States, 150 F.2d 642 (2nd Cir. 1945):

Beyond question the plaintiff made a promise to deliver rock at a stated price; and if the United States were suing for its breach the question would be whether the "acceptance" by the United States operated as a sufficient consideration to make the plaintiff's promise binding. Since the United States is the defendant the question is whether it made any promise that has been broken. Its "acceptance" should be interpreted as a reasonable business man would have understood it. Surely it would not have been understood thus: "We accept your offer and bind you to your promise to deliver, but we do not promise either to take the rock or pay the price." The reservation of a power to effect cancellation at any time meant something different from this. We believe that the reasonable interpretation of the document is as follows: "We accept your offer to deliver within a reasonable time, and we promise to take the rock and pay the price unless we give you notice of cancellation within a reasonable time." Only on such an interpretation is the United States justified in expecting the plaintiff to prepare for performance and to remain ready and willing to deliver. Even so, the bidder is taking a great risk and the United States has an advantage. It is not "good faith" for the United States to insist upon more than this. It is certain that the United States intended to bind the bidder to a "contract," and that the bidder thought that the "acceptance" of his bid made a "contract". A reasonable interpretation of the language used gives effect to their mutual intention. Consequently we cannot accept the contention that the defendant's power of cancellation was unrestricted and could be exercised merely by failure to give delivery orders. The words "cancellation may be effected at any time" imply affirmative action, namely, the giving of notice of intent to cancel. The defendant itself so construed the clause by giving notice of cancellation on July 11, 1939, as alleged in its answer. While the phrase "at any time" should be liberally construed, it means much less than "forever." If taken literally, it would mean that after the defendant had given instructions for delivery and the plaintiff had tendered delivery in accordance therewith, or even after delivery had actually been made, the defendant could refuse to accept and when sued for the price give notice of cancellation of the contract. Such an interpretation would be not only unjust and unreasonable, but would make nugatory the entire contract, contrary to the intention of the parties, if it be assumed that the United States was acting in good faith in accepting the plaintiff's bid. The words should be so construed as to support the contract and not render illusory the promises of both parties. This can be accomplished by interpolating the word "reasonable", as is often done with respect to indefinite time clauses. See Starkweather v. Gleason, 221 Mass. 552, 109 N.E. 635. Hence the agreement obligated the defendant to give delivery instructions or notice of cancellation within a reasonable time after the date of its "acceptance." This constituted consideration for the plaintiff's promise to deliver in accordance with delivery instructions, and made the agreement a valid contract.

Other Questions

How have courts interpreted a liquidated damages clause in a contract? (MultiRegion, United States of America)
What is the test for a contract where the contract states that the contract does not stipulate that a contingency may occur after the contract has been signed? (MultiRegion, United States of America)
How have courts interpreted a "specific clause" in a personal injury contract? (MultiRegion, United States of America)
Can a defendant waive his right to receive translation services provided by a court interpreter under the Court Interpreters Act? (MultiRegion, United States of America)
How have courts interpreted the parsimony clause in sentencing decisions? (MultiRegion, United States of America)
Is a federal district court's interpretation of a federal statute a de novo review of the interpretation of the federal statute? (MultiRegion, United States of America)
How have courts interpreted time limits in civil litigation? (MultiRegion, United States of America)
Does a unilateral cancellation of an option contract constitute an assignment of rights set out in a contract? (Canada (Federal), Canada)
How have courts interpreted federal legislation in the context of constitutional interpretation? (MultiRegion, United States of America)
Is a federal district court's interpretation of a federal statute a de novo review of the interpretation of the federal statute? (MultiRegion, United States of America)

Whitelogo nobg 300dpi sm

"The most advanced legal research software ever built."

Trusted by top litigators from across North America.