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Harvela Investments v Royal Trust Co of Canada (1985) HL
The first defendant, R, asked the plaintiff, H, and the second defendant, O, to submit sealed bids for particular shares and agreed to accept the highest price. H bid C$2,175,000 whereas O bid the higher of C$2,100,000 and ’C$101,000 in excess of any other offer…expressed as a set monetary amount’. R thought itself compelled to sell the shares to O for $2,276,000 and R’s solicitors wrote a telex to O and H saying
‘In the circumstances, our clients are compelled to accept and do hereby accept the offer received from [O]…’. H requested a declaration that R was bound to transfer the shares to it and an order for specified performance.
Held (I) On its true structure, R’s invitation to bid constituted a fixed bidding sale and it was not consistent with an aim to accept referential offers (those calculated by reference to other bids). Therefore, R was obliged to accept H’s bid as the highest valid bid submitted. (II) The telex accepting O’s bid was an attempt to execute existing obligations between R and O and so it was not an offer or acceptance of any new contract. It consequently did not give rise to any obligation to sell the shares to O.
The first defendant, R, asked the plaintiff, H, and the second defendant, O, to submit sealed bids for particular shares and agreed to accept the highest price. H bid C$2,175,000 whereas O bid the higher of C$2,100,000 and ’C$101,000 in excess of any other offer…expressed as a set monetary amount’. R thought itself compelled to sell the shares to O for $2,276,000 and R’s solicitors wrote a telex to O and H saying
‘In the circumstances, our clients are compelled to accept and do hereby accept the offer received from [O]…’. H requested a declaration that R was bound to transfer the shares to it and an order for specified performance.
Held (I) On its true structure, R’s invitation to bid constituted a fixed bidding sale and it was not consistent with an aim to accept referential offers (those calculated by reference to other bids). Therefore, R was obliged to accept H’s bid as the highest valid bid submitted. (II) The telex accepting O’s bid was an attempt to execute existing obligations between R and O and so it was not an offer or acceptance of any new contract. It consequently did not give rise to any obligation to sell the shares to O.
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