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by the previous and referenced telephone and other conversations, may constitute a sharp issue of fact. But even assuming that agreement between the parties, we have held that where the recipient of a purchase order takes sufficient and substantial actions looking toward delivery, a contract is deemed to have arisen between the parties before the scheduled due date, with the usual legal consequences for both parties. World Electrical Specialties Corp., ASBCA No. 9510, 65-1 BCA par. 4679, and cases and authorities cited there. In our opinion, the instant case falls into that category, even if we decide that the delivery of December 21, 1965, was solely for the purpose of testing one characteristic of an otherwise incomplete reflector. Thus, we find that a contract did arise between the parties.



249 U.S. 313 (1919)

Mr. Justice McKenna delivered the opinion of the court. Action brought by appellee, the Purcell Envelope Company which we shall designated as the Enevelope Company, against the United States for damages for breach of an express contract. The Court of Claims rendered judgment for the Envelope Company for the sum of $185,331.76. The United States Appeals.

The findings of the court are quite voluminous, but is only necessary to quote from them to the following effect: The Post Office Department, through the Postmaster General, James A. Gary, invited by advertisement bids "for furnishing stamped envelopes and newspaper wrappers in such quantities as may be called for by the department during a period of four years, beginning on the first day of October, 1898." In pursuance of the invitation the Envelope Company submitted a bid in the manner and time specified in the advertisements of the Department.

The bid of the Envelope Company was accepted, and the following order entered:

.. 2nd. That the contract for furnishing the
envelopes called for by the advertisement and specifications
referred to be awarded to the Purcell Envelope Co., of
Holyoke, Mass., as the lowest bidder for the Government
standard of paper, at the following prices a thousand,



The Department, before issuing the order, investigated the financial responsibility of the Envelope Company and considered it satisfactory.

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April 21, 1898, the Department sent to the Envelope Company a "'contract in quadruplicate," to be executed "at once" and returned to the Department. It was promptly returned as requested, signed by the president of the Envelope Company, with the Fidelity & Deposit Company of Maryland as surety in the sum of $200,000.

On April 27, 1898, the Department, by the Third Assistant Postmaster General, wrote to the Envelope Company as follows:

"Your telegram of today is before me. As the Postmaster General has not yet signed the contract awarded by the Department to your company for furnishing stamped envelopes during the coming four years, but is holding the matter in abeyance, I have to request that you suspend all action under my letter of the 21st instant until further orders."

The Envelope Company had, however, already made arrangements and contracts for the supplying to it of the necessary materials to fulfill the terms of the contract and was ready and willing at all times to fully perform it according to its terms. But neither the Postmaster General, nor any department or officer of the Government made any call or request upon the Envelope Company to furnish or deliver the envelopes or wrappers which were the subject-matter of the contract and the company's plant was kept intact ready for the performance of the contract, remaining idle.

22 July 1898, the Department, throgh Postmaster General Smith, the immediate successor of Postmaster General Gary, the latter having gone out of office, revoked and cancelled the contract and declared it to be null and void. Prior to doing so the Postmaster General instituted an investigation through one of his proper officers into the business and financial standing of the Envelope Company and the report thereunder was unfavorable to the company.

On or about 22 July 1898, the Envelope Company, having received information that the Postmaster General designed readvertising for proposals sought by a bill filed in the Supreme Court of the District of Columbia to enjoin his action. The bill was dismissed 15 August 1898. The court, however, was of opinion that a contract had been executed but that the Envelope Company had an efficient remedy at law,

An offer was subsequently made by two other companies to supply the Post Office Department, upon an emergency contract, stamped envelopes and wrappers of the kinds and qualities the Government should need. The Department declared that an emergency existed under § 3709, Rev. Stats., accepted the offer and entered into a contract in accordance herewith.

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The total cost to the Envelope Company for materials and the manufacture and delivery of the envelopes and wrappers in accordance with the terms of its contract would have been $2,275, 224.46. Deducting that sum from the contract price leaves a difference of $185,331.76, which represents the profit the company would have made if it had been allowed to perform its contract. For that sum judgment was entered.

It will be observed from the recitation of the above facts that the case presents the propositions --First, was there a completed contract between the Envelope Company and the United States through its Postmaster General, and, second, if there was such contract, what is the measure of damages?

For an affirmative answer to the first proposition the Envelope Company relies on Garfielde v. United States, 93 U.S. 242, and on that case the Court of Claims rested its decision and considered that the case was supported by other cases which were cited.

The case may be considered as the anticipation of this--its prototype. It passed upon a transaction of the Post Office Department and decided that a proposal in accordance with an advertisement by that department and the acceptance by it of the proposal "created a contract of the same force and effect as if a formal contract had been written out and signed by the parties." And for this, it was said many authorities were cited but it was considered so sound as to make unnecessary review of or comment upon them.

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In resistance to the case as conclusive the Government urges the qualification that "the court did not say, or assume to say, that the acceptance of the proposal in all (counsel's] cases constituted a contract, but held that it did in the present [that] case'!, and that "there was a reason for the conclusion. .which does not obtain in the case at bar", We cannot agree, and in answer to the first qualification it is only necessary to say that the court expressed a principle, not, of course, applicable to all cases, but applicable to like cases; and the present is a like case, identical in all that makes the principle applicable. And in so determining we answer the other objection of the Government that there were features in the law in the Garfielde Case which do not obtain the pending case, which constituted, if we understand counsel, the de temination of the law against the act of the Postmaster General, his duty being merely ministerial. In the present case, it is insisted his action is not so subordinate, that he has discretion, and when exercised it is paramount, his action being "quasi judicial", the contract not having been consummated, and that, therefore, it was within his power to review and set aside the decision of his predecessor. We are unable to concede the fact or the power asserted to be dependent upon it. There must be a point of time at which discretion is exhausted. The procedure for the advertising for bids for supplies or services to the Government is given the benefit of the competition of the market and each bidder is given the chance for a bargain. It is a provision, therefore, in the interest of both Government and bidder, necessarily giving rights to both and placing obligations on both. And it is not out of place to say that the Government should be animated by a justice as anxious to consider the rights of the bidder as to insist upon its own. And, we repeat, there must be some point at which discretion ceases and obligation takes its place. That point is defined in the Garfielde Case, and that the definition is applicable to the case at bar is illustrated by the findings of the Court of Claims. Upon the invitation, in accordance with law, of Postmaster General Gary, the Envelope Company and eleven others submitted bids. The Envelope Company was the lowest bidder and after the Company had been found upon investigation to be financially responsible its bid was accepted by entry of a formal order. The Company was then directed by the Department to execute the necessary contract in quadruplicate which it did, and returned the contract to the Department with a surety whose responsibility was not questioned at any time nor was other security demanded, as it might have been. Postmaster General Gary went out of office, and his successor, either by inducement or upon his own resolution, revoked the contract and entered into a contract with other companies.

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The record furnishes no justification of such action. There is no charge of default against the Envelope Company, no charge of inability to perform its contract, except in a particular which we shall hereafter mention. There is, it is true, a finding that Postmaster General Smith caused an investigation to be made of the financial standing of the Envelope Company and that the report thereunder was unfavorable to it. This is made a great deal of, and the fact that the contract was not signed nor the bond of the Envelope Company approved.

It makes no difference that the contract was not formally signed or the bond formally approved, as counsel for the Government contends they should have been, both by the terms of the contract and by a statute of the United States (28 Stat. 279). Their formal execution, as we have seen was not essential to the consummation of the contract. That was accomplished, as was decided in the Garfielde Case by the acceptance of the bid of the Envelope Company and the entry of the order awarding the contract to it. Therefore, we do not follow with minute attention the argument of the Government in asserting the power of Postmaster General Smith to review and annul his predecessor's decision and that directed against the financial standing of the Envelope Company or the deception the Government asserts was practiced on Postmaster General Gary, which are made the subject of a request for findings. We may assume that the Court of Claims considered such charges and all other elements before concluding that the Envelope Company was entitled to recover.

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The contractual instrument from which this appeal arises is a Purchase Order signed only by the contracting officer. As the basis for its issuance, it recites an oral quotation received from appellant. It contains a standard Disputes article but no Default or other termination article.

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The principal question presented is appellant's right to repudiate the contract without liability. The operative questions controlling of our decision are:

1. Whether a binding bilateral contract resulted from the parties' negotiations;

2. Whether appellant's failure to deliver the items ordered was a default provided for under the contract; and,


The appropriate remedy available to the parties.

Appellant contends the contract was unilateral and that as offeree it had the right to avoid the contract and to render it unenforceable by its failure to perform. Respondent contends that appellant's oral quotation was an offer which the Government seasonably accepted when it issued an authorization to proceed and confirming Purchase Order. Alternatively, it contends that appellant's preparations for performance were sufficient manifestation of acceptance of the Purchase Order to convert a unilateral contract into a binding bilateral agreement.

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On the merits, we find there was no binding bilateral agreement. For this reason, we find the contracting officer erroneously assessed and collected as excess costs the sum of $1,324.34 based on its purported termination.

The Request for Quotations, the Purchase Order, and the regulations governing their use negate the existence of an agreement based upon mutuality of obligation. Corbin on Contracts, Section 152, at 498 (1950 ed.). One who asserts that a quotation of prices is an offer has the burden of showing the exact terms of the offer. A quotation of prices,

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