248 N.Y. 86, 161 N.E. 428 (1928)
John Petterson owned a parcel of real estate known as 5301 Sixth Avenue in Brooklyn. The defendant held a bond executed by Petterson secured by a third mortgage on the property. On April 4, 1924, $5,450 remained unpaid on the principal, payable in installments of $250 on April 25, 1924, and every three months thereafter.1
Under date of April 4, 1924, the defendant wrote to Petterson agreeing to accept cash for the mortgage and to allow a deduction of $780 if the mortgage was paid on or before May 31, 1924, provided the regular quarterly payment due April 25 was paid when due.2 Petterson paid the April 25 installment as specified.3
In the latter part of May 1924, Petterson went to the defendant's home and knocked at the door. When the defendant inquired who was calling, Petterson identified himself and stated he had come to pay off the mortgage. The defendant replied that he had sold the mortgage. Petterson then exhibited the cash and said he was ready to pay according to the agreement, but the defendant refused to accept the money.4
Petterson had previously made a contract to sell the land to a third person free and clear of the mortgage. The defendant had sold the bond and mortgage to another party. Petterson therefore paid the full amount to that third party.5
The plaintiff has had a recovery for the sum thus claimed, with interest.6
Whether the defendant's April 4, 1924 letter constituted an offer to form a unilateral contract that remained revocable until the requested act of payment was completed?7
An offer to enter into a unilateral contract invites acceptance solely by performance of the precise act requested by the offeror. Until that act is completed the offer remains revocable because no consideration has yet been furnished.8
Yes. The defendant's letter of April 4, 1924, proposed to Petterson a reduction of $780 on the mortgage debt in exchange for full payment of the reduced principal on or before May 31, 2024.9 Petterson paid only the April 25 installment and had not completed the full payment when he approached the defendant's home.10 Because the specific act of completed payment had not occurred, the offer stayed revocable at the moment the defendant sold the mortgage to a third party.11
The letter constituted an offer for a unilateral contract that remained revocable until the requested act of payment was completed.12
Related opinions on this issue
Joined by Andrews, J.
Justice Lehman dissented, arguing that the defendant's promise to accept payment at a discount was made to induce early payment by Petterson.13 Principles of fundamental justice prevent a promisor from causing the failure of a condition and then relying on that failure.14 He concluded that the offer became binding once Petterson arrived with present intention and ability to pay.15
The defendant could not have intended to require his own performance as part of the consideration requested from the plaintiff.16
Whether the defendant's statement that he had sold the mortgage operated as an effective revocation of the offer before Petterson made a tender of payment?17
Revocation of an offer for a unilateral contract is effective when the offeree receives actual knowledge that the offeror has taken an act inconsistent with the offer's continuation. Such knowledge may arise from selling the subject matter to a third party, even without formal notice.18
Yes. Upon Petterson's arrival at the defendant's home in the latter part of May 1924, the defendant stated that he had sold the mortgage before Petterson exhibited the cash or completed any tender.19 This statement supplied Petterson with direct knowledge that the defendant had transferred the bond and mortgage. Any subsequent tender to the defendant was therefore ineffective, thereby revoking the offer.20
The defendant's statement that he had sold the mortgage operated as an effective revocation of the offer before Petterson made a tender of payment.21
Whether Petterson's announcement at the defendant's door and display of cash amounted to performance of the act requested in the offer sufficient to create a binding contract?22
Performance sufficient to create a binding unilateral contract requires completion of the exact act requested by the offeror. An announcement of intent coupled with a display of funds falls short when the offeror has already withdrawn the offer and the completed payment has not been accepted.23
No. Petterson identified himself at the door and stated he had come to pay off the mortgage. He then exhibited the cash after the defendant announced the sale, but the defendant refused to accept the money.24 The requested act was the completed payment of the reduced principal. That act never occurred because the defendant had already transferred the mortgage and declined to receive the funds.25
Petterson's announcement at the defendant's door and display of cash did not amount to performance of the act requested in the offer sufficient to create a binding contract.26