Validity and Effects of Contracts in the Conflict of Laws (Part 3)

Abstract

A question may arise whether there was in legal contemplation a meeting of minds. Suppose that A in New York makes an offer to B in Germany by mail, and that he revokes it by cable after B has received the letter containing the offer. Under the German law A is bound by his offer if it is accepted within the period within which A would under ordinary circumstances expect an answer. If the transmission of a letter between New York and Germany takes two weeks B could accept the offer by cable at any time before the expiration of the two weeks after the receipt of the offer. Under the law of New York A is not bound by his offer and can withdraw it at any time before it is accepted. If B accepts the offer within the period mentioned, has a contract been formed? It has been said that the offeror is deemed present in the state in which his offer has been received, 'and the conclusion has been drawn that A's duty to keep his offer open should be governed in the above case by German law. Such a deduction involves, however, a process of reasoning that starts from a false premise. If the law of the forum regards the contract as made in the state from which the acceptance is sent, in our case, Germany, the consequences will be the same, of course, as if A had made the offer in person in Germany. But the preliminary question, where the .contract was made, is actually decided by the law of the forum without reference to the German law. If the German law had been consulted the contract would have been made in New York. For the same reason the law of the forum must determine, in accordance with its own views, the preliminary question regarding the binding nature of an offer. There is no more reason why the court should consult German law on this point than there was in determining the situs of the contract. These preliminary questions must in the nature of things be determined by each court in accordance with its own law except perhaps where a contract is concluded between two foreign states or nations whose laws agree on the subject. The other possible alternative, that of requiring compliance with the law of both states under all circumstances, does not commend itself because it restricts too greatly the formation of contracts from an international point of view.