Petterson v. Pattberg
161 N.E. 428 · New York Court of Appeals · 1928
Facts
John Petterson held a mortgage from the defendant. The defendant offered to reduce the principal by $780 if Petterson paid the mortgage in full by May 31, 1924, after making a quarterly payment. Petterson made the quarterly payment and, in late May, went to the defendant's home to pay the reduced amount, but before he could tender the money, the defendant informed him that the mortgage had been sold.
Issue
Can an offer for a unilateral contract be revoked by the offeror before the offeree has fully performed the requested act, even if the offeree has taken steps towards performance and is ready to tender?
Holding
The court held that the defendant's offer was effectively revoked before Petterson's acceptance (full payment) could be completed. Therefore, no binding contract was formed, and the plaintiff could not recover the promised discount.
Rule
An offer for a unilateral contract can be revoked at any time before the offeree has fully performed the requested act. Revocation is effective if the offeree receives notice, or has actual knowledge, that the offeror has taken an action inconsistent with the continuance of the offer, such as selling the subject matter to a third party.
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