Question

Patrick Barnes and George Layton were employed by the Sailors' Maritime Service. When they expressed dissatisfaction with their jobs, their employer offered them a new contract whereby they would receive a 10 percent bonus on company profits if they remained with the firm. Several times they discussed the terms of the new agreement within an official of Sailors' Maritime. Eventually, they decided that the offer was a good one, and they continued on the job as usual. Sailors' later refused to pay the 10 percent bonus, claiming that its offer had never been accepted. Is Sailors' maritime refusal to pay legally correct? Or, to pinpoint the issue more directly, was the offer accepted by Barnes and Layton? Explain. Now Suppose that Sailors' Maritime had said to Barnes and Layton, "We will consider your written acceptance of this new proposal as binding us to the payments of 10 percent bonus," Would these additional facts change your initial evaluation of this case? Why or why not?

Answer 1

Sailors' maritime’s refusal to pay is legally wrong. In this case, by offering 10 percent bonus on company profits to Patrick Barnes and George Layton for remaining with the firm, the company has created a unilateral contract with both of them which can be accepted by the offeree’s performance. Unilateral contract is a promise for an act and the contractor cannot revoke the offer once the performance has begun. Hence the company’s move to revoke the offer is illegal. The offer was accepted by Barnes and Layton here because in the case of unilateral contracts, acceptance is evident through performance and notification is not necessary unless the offereor requests the notice of the acceptance or the offeror has no way of determining whether the requested act has been performed. Both of them had discussed the terms of the new agreement within an official of Sailors' Maritime several times and had continued on the job as usual. Hence notification is not required here as it is clear from their act that they have accepted the offer.

The initial evaluation of this case would change if Sailors' Maritime had said to Barnes and Layton for written acceptance of the new proposal because notification is necessary if the offeror has requested the notice of the acceptance. The performance without giving written acceptance would not be considered as acceptance of the offer and Sailors’ Maritime’s refusal to provide the bonus would become legally correct based on these additional facts.