Nat'l Union Fire Ins. Co. v. Ehrlich - 203 N.Y.S. 434 (App. Term 1924)

Rule:

Generally speaking an offeree has a right to make no reply to offers. But the relations between the parties may have been such as to have justified the offeror in expecting a reply. When property is sent to another though not ordered but under such circumstances that the latter knows that payment is expected, the silent acceptance of the property is in effect an assent to the offer of sale implied by the sending of the property.

Facts:

A broker had for some time procured fire insurance policies for the insured. One such policy expired, and the broker sent to the insured a renewal policy issued by the insurer and a bill for the premium. The insured retained the policy and bill for two months and then, in response to demand for payment, rejected the policy. The insurer filed a complaint seeking to recover the premium accrued prior to the rejection. The Municipal Court of the city of New York dismissed the insurer’s complaint. The insurer appealed. 

Issue:

Under the circumstances, was the insurer entitled to recover the premium which accrued prior to the insured’s rejection of the policy? 

Answer:

Yes.

Conclusion:

The court reversed the dismissal of the complaint. The court ruled that although an offeree had a right to make no reply to offers, the relations between the parties were such as to have justified the insurer in expecting a reply. The court held that the receipt and retention by an insured of a renewal policy created a binding contract. The court also found that the previous relations justified the insurer's assuming that the insured's retention of the policy implied acceptance.