An offer that is unequivocally accepted creates a contract. But what happens when an offeree attempts to accept an offer while modifying the terms? Today, we consider that question and learn about the mirror image rule by looking at the 1886 case decided by the United States Supreme Court, called Minneapolis and St. Louis Railway Company versus Columbus Rolling-Mill Company. In Minneapolis and St. Louis railway, the plaintiff, a railroad company, sent a letter dated December 5th to the defendant, a manufacturer, requesting price quotes for steel rails. The letter asked for the prices for 500 to 3,000 tonnes of steel rails and 2,000 to 5,000 tonnes of iron rails. The defendant manufacturer replied on December 8th, writing that it did not make steel rails but would sell 2,000 to 5,000 tons of iron rails for $54 per gross tone for cash. On December 16th, the railway company responded by telegram and followed up with a second letter to accept the manufacturer's offer for 1,200 tonnes of iron rails at the quoted price. The manufacturer responded by telegram that it could not book the order at that price. The railway then sent a telegram accepting the offer to sell 2,000 tonnes. The manufacturer did not fill that order either and denied the existence of any contract. The trial court found for the defendant manufacture and the instant court affirmed. So the central issue in this case is fairly straightforward. Was the defendant bound to honor the plaintiff's final acceptance of the offer to sell 2,000 tonnes of iron rails? And the answer is, no. The court agreed with the defendant and held that no contract was formed. The defendant offered to sell 2,000 to 5,000 tonnes of iron and rail to the plaintiff. The plaintiff then attempted to accept the offer by ordering just 1,200 tonnes, an amount less than the 2,000 tonne minimum offered. The court held that, "A proposal to accept, or an acceptance, upon terms varying from those offered, is a rejection of the offer, and puts an end to the negotiation, unless the party who made the original offer renews it, or assents to the modification suggested." Since the plaintiff's qualified acceptance varied the number of tonnes, it was in law a rejection of the offer. The plaintiffs subsequent attempt to accept the defendant's offered to sell 2,000 tonnes of iron rails was therefore unenforceable because as the court put it, the other party having once rejected the offer cannot afterward revive it by tendering an acceptance to it. The holding in Minneapolis and St. Louis railways is really a classic example of the common law mirror image rule. The mirror image rule operates with admirable simplicity. Any response by an offeree which varies or adds to the terms of an offer is treated as a counteroffer. In turn, that counteroffer terminates or blows up the original offer. Traditionally, courts have insisted upon a total congruence between the offer and acceptance. In other words, the acceptance must be the mirror image of the offer. So here's a pop quiz. Ben, knowing Alex is looking to sell his car, meets Alex at his home. Alex offers to sell the car for $10,000. After kicking the tires a bit, Ben tells Alex, "I'll take the car, with a new air freshener, for $10,000." Immediately after Ben finishes the sentence, Carry drives by, leans out the window, and shouts, "I'll take the car for $12,000." Alex then refuses to sell the car to Ben, who is now willing to take the car as it is without a new air freshener for $10,000. Is Alex bound to sell the car to Ben? No. Ben's response that he would buy the car and a new air freshener vary the terms of Alex's original offer. Therefore, under the mirror image rule, it was not an acceptance, it was a counteroffer, and thus a rejection that terminated the original offer. Under the mirror image rule, even a non-material variation like an air freshener can be fatal. The assumption, underlying the mirror image rule is that if the offeree introduces new or different terms, the offeree does not assent to the offer and further negotiation is required. It would be clearly impermissible for an offeree buyer to accept an offer while at the same time reducing the offer or selling price. But other less important terms are connected to the price. Unilateral changes introduced by the offeree might change the offeror's costs or risk. The offeror might agree to any changes but that should be the offeror's choice. An offeree cannot pick and choose from among the terms agreeing here and disagreeing there and then assert the existence of a mutual agreement. However, the mirror image rule has its downsides. The mirror image rule makes it more difficult to create contracts because any deviation by the offeree and restating the terms can destroy what otherwise would be a validly formed contract. Accepting by restating terms of the offer is dangerous because if you misstate any of the terms, you not only don't accept but your misstatement blows up the original offer and your option to accept is gone. That's why it's safer to accept by simply saying, "I accept, or okay, or done." If a party wishes to negotiate a point, he does so at his own peril because doing so will terminate the original offer. Or, if the parties seemingly reach an agreement but one party later discovers that the acceptance differs slightly from the offer, the mirror image rule provides that party with a route to withhold performance. There are strong hints of the mirror image rule in Section 59 of the restatement second of contract which is, "A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer." The restatement, however, is a little more forgiving than the common law mirror image rule under Section 61, an offeree may request additional changes when she accepts an offer. Section 61 reads, "An acceptance which requests a change or addition to the terms of an offer is not thereby invalidated unless the acceptance is made to depend on assent to the changed or added terms." Consider again the example above, where Alex offers to sell his car to Ben for $10,000. This time, instead of insisting on a new air freshener, Ben tells Alex, "You have a deal, and I'd appreciate it if you could throw in a new air freshener for good measure." Under this scenario, can Alex revoke his offer after Carry drives by and offers $12,000 for the car? No. Under section 61 of the restatement, Ben is allowed to accept Alex's offer and request a complimentary air freshener, as long as his acceptance does not depend on Alex providing the air freshener. Here, Ben explicitly accepted Alex's offer and did not seem to condition that acceptance on his request for a new air freshener. Under the common law, the mirror image rule is a default rule which can be contracted around by either the offeror or the offeree. As described by Section 39 sub part two of the restatement, "An offeree's power of acceptance is terminated by his making a counteroffer, unless the offeror has manifested a contrary intention or unless the counteroffer manifests a contrary intention of the offeree." In other words, an offeror can specify that an offer is not terminated by a counteroffer and an offeree can make a counteroffer without rejecting the original offer. Section 39 is unusual because it creates what might be called a double-sided default rule, which can be unilaterally altered by either the offeror or the offeree. Let's recap. Today, we discuss the mirror image rule which says, that an offeree we cannot accept an offer while simultaneously and unilaterally changing the terms of the offer. Introducing new terms creates a counteroffer and unless otherwise specified by either of the parties, a counteroffer destroys the original offer.
