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Prescott v. Jones - 69 N.H. 305 (1898)

Rule:

An uncommunicated mental determination cannot create a binding contract.

Facts:

Defendants Jones and his partner, as insurance agents (collectively, "Agents"), insured the Prescott's buildings until Feb. 1, 1897. On Jan. 23, 1897, they notified him by letter that they would renew the policy and insure his buildings for a further term of one year from Feb. 1, 1897, in the sum of $ 500, unless notified to the contrary by him. Prescott relied on the promise to insure unless notified to the contrary and believed that the buildings would be insured by the Agents for one year from Feb. 1, 1897. The Agents did not give notice to Prescott to insure or not to insure. Prescott alleged that the Agents did not insure the buildings as they had agreed and did not notify him of their intention not to do so. The buildings were destroyed by fire on March 1, 1897, without fault on Prescott's part. Prescott filed a lawsuit against the Agents in New Hampshire state court, claiming that the Agents did not perform their end of the bargain and therefore breached the parties' contract for insurance coverage for a one-year term beginning on Feb. 1, 1897. The Agents demurred to the complaint.

Issue:

Did Prescott accept the offer, so that it became, by his action, clothed with legal consideration and perfected with the requisite condition of mutuality?

Answer:

No.

Conclusion:

The state supreme court sustained the Agents' demurrer to Prescott's complaint. The court ruled that Prescott never accepted the Agents' offer. Although Prescott determined in his own mind that he would accept, a mental determination that was not communicated did not create a binding contract. The court rejected Prescott's contention that the letter sent by the Agents worked as estoppel. The court ruled that the letter concerned only the Agents' intent as to their future action and was not a statement of fact of things actually existing. The letter was a representation only of a present intention or purpose on their part. The court observed that an estoppel could not arise from a promise as to future action with respect to a right to be acquired upon an agreement not yet made.

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