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Introduction to Offer and Acceptance (Objective and Subjective Tests)
Two of the four components needed to create a legally enforceable contract are the offer and the acceptance. The aim to establish legal relations and consideration are the other components. An offer must be made and accepted by the offeree in order for there to be a legally enforceable agreement.
Important word: offeror
The offeror is the one who extends the offer.
Important word: offeree
The offeree is the individual to whom the offer is made.
The objective test
When determining whether there is a legally binding agreement between the parties, the courts typically apply an objective test. This implies that the way a reasonable person would interpret the parties' interactions is taken into account by the courts.
Important phrase: the objective examination
The courts apply an objective criteria to ascertain whether an agreement has been made. The interaction between the parties is examined by the courts from the perspective of a reasonable person.
The subjective test
When determining whether an agreement exists, the courts use a subjective test rather than an objective test under certain conditions.
When the offeree should have known or knew that the offeror committed a mistake, the subjective test is used. For instance, in situations when the offeree is aware that the offeror does not intend for the conditions of the offer to be what the terms' plain meaning would imply. This exception to the general rule is crucial to keep in mind since it states that the offeror is not obligated to follow the terms of the contract if it can be demonstrated that the offeree knew or should have known that the offeror is erroneous. Keep in mind that this exception only applies if the error concerns a contractual term (like the price) as opposed to an incidental issue (like the item's color).
Illustration
Roland is a lobster vendor. He has previously corresponded with Diana, offering to sell her a shipment of lobsters for £50 apiece. He erroneously offers to sell her the entire shipment of crabs for £50 two weeks later. Diana agrees to the deal, but Roland won't sell her the £50 consignment of lobsters after realizing his error.
Is Diana able to make Roland sell her the shipment of crabs for fifty pounds?
If Roland can present the court with proof that Diana knew, or had to know, that his offer was incorrect and that Diana could not have reasonably assumed that the offer represented Roland's true intention, then the answer is negative. In situations such as these, the courts will determine that Diana knew, or should have known, that Roland was mistaken and that Roland will not be obligated to sell Diana the entire consignment of lobsters for £50 if the evidence demonstrates that: the market practice for selling lobsters is to sell them at a price per lobster, and there is a substantial difference between the price per lobster and the price per consignment, and there is previous correspondence from Roland to sell at a price per lobster.
Two of the four components needed to create a legally enforceable contract are the offer and the acceptance. The aim to establish legal relations and consideration are the other components. An offer must be made and accepted by the offeree in order for there to be a legally enforceable agreement.
Important word: offeror
The offeror is the one who extends the offer.
Important word: offeree
The offeree is the individual to whom the offer is made.
The objective test
When determining whether there is a legally binding agreement between the parties, the courts typically apply an objective test. This implies that the way a reasonable person would interpret the parties' interactions is taken into account by the courts.
Important phrase: the objective examination
The courts apply an objective criteria to ascertain whether an agreement has been made. The interaction between the parties is examined by the courts from the perspective of a reasonable person.
The subjective test
When determining whether an agreement exists, the courts use a subjective test rather than an objective test under certain conditions.
When the offeree should have known or knew that the offeror committed a mistake, the subjective test is used. For instance, in situations when the offeree is aware that the offeror does not intend for the conditions of the offer to be what the terms' plain meaning would imply. This exception to the general rule is crucial to keep in mind since it states that the offeror is not obligated to follow the terms of the contract if it can be demonstrated that the offeree knew or should have known that the offeror is erroneous. Keep in mind that this exception only applies if the error concerns a contractual term (like the price) as opposed to an incidental issue (like the item's color).
Illustration
Roland is a lobster vendor. He has previously corresponded with Diana, offering to sell her a shipment of lobsters for £50 apiece. He erroneously offers to sell her the entire shipment of crabs for £50 two weeks later. Diana agrees to the deal, but Roland won't sell her the £50 consignment of lobsters after realizing his error.
Is Diana able to make Roland sell her the shipment of crabs for fifty pounds?
If Roland can present the court with proof that Diana knew, or had to know, that his offer was incorrect and that Diana could not have reasonably assumed that the offer represented Roland's true intention, then the answer is negative. In situations such as these, the courts will determine that Diana knew, or should have known, that Roland was mistaken and that Roland will not be obligated to sell Diana the entire consignment of lobsters for £50 if the evidence demonstrates that: the market practice for selling lobsters is to sell them at a price per lobster, and there is a substantial difference between the price per lobster and the price per consignment, and there is previous correspondence from Roland to sell at a price per lobster.
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Felthouse v. Bindley, 1862 CCP
The plaintiff's nephew intended to use the defendant, an auctioneer, to arrange an auction in Tamworth to get rid of his farming stock, which included a particular horse. The plaintiff and his nephew had an oral negotiation in order to purchase the horse. On January 2, 1862, the plaintiff uncle wrote to his nephew after they had a disagreement on the horse's purchase. He said, "As there may be a mistake about him, I will split the difference—£30 15s—1 paying all the expenses from Tamworth." You can send him whenever it's most convenient for you, up until March 25. I'll consider the horse mine for £30 15s if I hear nothing more about him. When the nephew failed to respond, the defendant sold the horse at auction for £33, on February 25. The defendant sent a letter to the plaintiff on February 26 apologizing for his error, and the nephew followed up on February 27 with a letter mentioning the error with the horse I sold you. The plaintiff filed a conversion action, stating that the defendant had sold the horse on February 25th, it was decided that the plaintiff had no right to the horse and was not the owner. Per Willes J.
…it is…clear that the uncle had no right to impose upon the nephew a sale of his horse for £30 15s unless he chose to comply with the condition of writing to repudiate the offer… The horse in question being catalogued with the rest of the stock, the auctioneer (the defendant) was told that it was already sold. It is clear therefore that the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named—£30 15s: but he had not communicated such an intention to his uncle, or done anything to bind himself.
The plaintiff's nephew intended to use the defendant, an auctioneer, to arrange an auction in Tamworth to get rid of his farming stock, which included a particular horse. The plaintiff and his nephew had an oral negotiation in order to purchase the horse. On January 2, 1862, the plaintiff uncle wrote to his nephew after they had a disagreement on the horse's purchase. He said, "As there may be a mistake about him, I will split the difference—£30 15s—1 paying all the expenses from Tamworth." You can send him whenever it's most convenient for you, up until March 25. I'll consider the horse mine for £30 15s if I hear nothing more about him. When the nephew failed to respond, the defendant sold the horse at auction for £33, on February 25. The defendant sent a letter to the plaintiff on February 26 apologizing for his error, and the nephew followed up on February 27 with a letter mentioning the error with the horse I sold you. The plaintiff filed a conversion action, stating that the defendant had sold the horse on February 25th, it was decided that the plaintiff had no right to the horse and was not the owner. Per Willes J.
…it is…clear that the uncle had no right to impose upon the nephew a sale of his horse for £30 15s unless he chose to comply with the condition of writing to repudiate the offer… The horse in question being catalogued with the rest of the stock, the auctioneer (the defendant) was told that it was already sold. It is clear therefore that the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named—£30 15s: but he had not communicated such an intention to his uncle, or done anything to bind himself.
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Trentham Ltd v Archital Luxfer Ltd (1992) CA
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
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Brogden and Others v Metropolitan Railway Company (1877) HL
B, the defendants, had been supplying coal to the plaintiffs, M, since the beginning of 1870. On 18 November 1871, B requested a price rise and a new contract. At a meeting on 19 December 1871, M gave to B a draft contract with blank spots for specifics such the date and the name of the arbitrator. B filled in the gaps, made some other modest changes and signed the draft contract. On 21 December, B’s representative returned the contract to M with a note that concluded ‘If you have anything further to communicate letters addressed to “Tondu” will find me’. This arrived M at whose office it was placed in a drawer, used for holding contracts, where it remained Offer and Acceptance 11 until a dispute developed on 7 November 1872. During 1872, B provided coal to M from the date of commencement of the draft contract, 1 January 1872, at the new price as indicated in the draft contract, often up to but never exceeding 350 tons per week, which was the maximum authorized by the draft contract.
Of the several letters which traveled between B and M during the year, Lord Cairns LC commented
: …having read with great care the whole of this correspondence, there appears to me clearly to be pervading the whole of it the expression of a feeling on one side and on the other that those who were ordering the coals were ordering them, and those who were supplying the coals were supplying them, under some course of dealing which created on the one side a right to give the order, and on the other side an obligation to comply with the order.
However, M maintained that, in the lack of acceptance by M of B’s offer, there was no contract.
Held (I) There was a binding contract upon the conditions of the uncompleted draft contained in M’s drawer.
Per Lord Cairns LC: …there having been clearly a consensus between these parties, arrived at and expressed by the document signed by [B], subject only to approbation, on the part of the company, of the additional term…with regard to an arbitrator, that approbation was clearly given when the company commenced a course of dealing which is referable in my mind only to the contract, and when that course of dealing was accepted and acted upon by [B] in the supply of coals.
Per Lord Hatherley, ‘the arrangement was consummated when the first coals… were invoiced at the differing price, and when that differing price was accepted and paid’.
(II) Neither M’s silence in answer to B’s agent’s letter of 21 December 1871 nor any just mental or private acceptance by M would have finalized the contract. Per Lord Blackburn, ‘when you come to the broad proposition…that a simple acceptance in your own mind, without any communication to the other party, and expressed by a mere private act, such as putting a letter into a drawer, completes a contract, I must say I differ from that’.
B, the defendants, had been supplying coal to the plaintiffs, M, since the beginning of 1870. On 18 November 1871, B requested a price rise and a new contract. At a meeting on 19 December 1871, M gave to B a draft contract with blank spots for specifics such the date and the name of the arbitrator. B filled in the gaps, made some other modest changes and signed the draft contract. On 21 December, B’s representative returned the contract to M with a note that concluded ‘If you have anything further to communicate letters addressed to “Tondu” will find me’. This arrived M at whose office it was placed in a drawer, used for holding contracts, where it remained Offer and Acceptance 11 until a dispute developed on 7 November 1872. During 1872, B provided coal to M from the date of commencement of the draft contract, 1 January 1872, at the new price as indicated in the draft contract, often up to but never exceeding 350 tons per week, which was the maximum authorized by the draft contract.
Of the several letters which traveled between B and M during the year, Lord Cairns LC commented
: …having read with great care the whole of this correspondence, there appears to me clearly to be pervading the whole of it the expression of a feeling on one side and on the other that those who were ordering the coals were ordering them, and those who were supplying the coals were supplying them, under some course of dealing which created on the one side a right to give the order, and on the other side an obligation to comply with the order.
However, M maintained that, in the lack of acceptance by M of B’s offer, there was no contract.
Held (I) There was a binding contract upon the conditions of the uncompleted draft contained in M’s drawer.
Per Lord Cairns LC: …there having been clearly a consensus between these parties, arrived at and expressed by the document signed by [B], subject only to approbation, on the part of the company, of the additional term…with regard to an arbitrator, that approbation was clearly given when the company commenced a course of dealing which is referable in my mind only to the contract, and when that course of dealing was accepted and acted upon by [B] in the supply of coals.
Per Lord Hatherley, ‘the arrangement was consummated when the first coals… were invoiced at the differing price, and when that differing price was accepted and paid’.
(II) Neither M’s silence in answer to B’s agent’s letter of 21 December 1871 nor any just mental or private acceptance by M would have finalized the contract. Per Lord Blackburn, ‘when you come to the broad proposition…that a simple acceptance in your own mind, without any communication to the other party, and expressed by a mere private act, such as putting a letter into a drawer, completes a contract, I must say I differ from that’.
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Stevenson, Jaques & Co. v. McLean, 1880
The sequence of events was as follows. (1) The plaintiff buyer received an offer from the defendant seller to purchase a quantity of iron for "40s, nett cash, open till Monday." The buyer sent a telegraph to the seller at 9:42 on Monday morning, asking them to confirm if they would accept forty for delivery over a two-month period, or if not, what the longest limit they would allow. (3) The buyer sent a telegraph to the seller, who did not respond. (4) A third party purchased the iron from the merchant. (5) The seller informed the buyer by telegram that he had sold the iron at 1:25 p.m. (6) The buyer and seller sent a telegraph at 1:34 p.m. stating that they "have secured your price for payment next Monday—write you fully by post." (In that market, it was customary to make payments by the next Monday.) (7) At 1:46 PM, the seller received the telegram in point (5).
Held that, in contrast to Hyde v. Wrench, the buyer's telegram in (2) was merely a question rather than a counteroffer. As a result, the buyer could still accept the initial offer up until the seller's revocation was made known, which didn't happen until (7). The seller was therefore required to sell to the buyer as his acceptance at point (6) was effective.
The sequence of events was as follows. (1) The plaintiff buyer received an offer from the defendant seller to purchase a quantity of iron for "40s, nett cash, open till Monday." The buyer sent a telegraph to the seller at 9:42 on Monday morning, asking them to confirm if they would accept forty for delivery over a two-month period, or if not, what the longest limit they would allow. (3) The buyer sent a telegraph to the seller, who did not respond. (4) A third party purchased the iron from the merchant. (5) The seller informed the buyer by telegram that he had sold the iron at 1:25 p.m. (6) The buyer and seller sent a telegraph at 1:34 p.m. stating that they "have secured your price for payment next Monday—write you fully by post." (In that market, it was customary to make payments by the next Monday.) (7) At 1:46 PM, the seller received the telegram in point (5).
Held that, in contrast to Hyde v. Wrench, the buyer's telegram in (2) was merely a question rather than a counteroffer. As a result, the buyer could still accept the initial offer up until the seller's revocation was made known, which didn't happen until (7). The seller was therefore required to sell to the buyer as his acceptance at point (6) was effective.
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Norfolk County Council v. Dencora Properties (1995) CA
The defendant corporation leased certain offices to the plaintiff council.
Tenant may change the terms of the 20-year lease after ten years, but only with two years' notice to the landlord. In order to dissolve the lease after 10 years as opposed to 20 years, the council had to submit notice by March 25, 1993, as the first 10 years would expire on that date. To allow the council more freedom to decide, the council sought the landlord to change the terms of the lease in late 1992.
In response, the landlord said:
In order to assist, we are prepared to postpone the notice period to break the lease to 1995 or 1996, but not both. The two year notice must remain.
The council then wrote to the landlord:
It is difficult therefore to forecast with any precision, but doing the best I can, it would seem that to be required to vacate in March 1997 cuts it too fine, and to vacate in March 1998 may be too long. I appreciate your assistance to date and agree to the two year notice, but ask if this could be given at any time but not earlier than March 1995. We could then gauge with some accuracy when the police should vacate Dencora House…
After the landlord turned down the council's proposal, the council attempted to accept the landlord's 1998 lease break offer by giving notice in 1996. The landlord, however, stated that its previous offer was no longer valid.
As in Hyde v. Wrench (1.2.1), it was held that the letter from the council that was cited above was a rejection of the landlord's offer along with a counter offer. The council's use of the interrogatory language, "but ask if this could be given," prevented the letter from falling into the same category as a simple question as that in Stevenson, Jacques & Co v. McLean (1.2.2). Thus, no agreement to change the conditions of the lease had been made.
The defendant corporation leased certain offices to the plaintiff council.
Tenant may change the terms of the 20-year lease after ten years, but only with two years' notice to the landlord. In order to dissolve the lease after 10 years as opposed to 20 years, the council had to submit notice by March 25, 1993, as the first 10 years would expire on that date. To allow the council more freedom to decide, the council sought the landlord to change the terms of the lease in late 1992.
In response, the landlord said:
In order to assist, we are prepared to postpone the notice period to break the lease to 1995 or 1996, but not both. The two year notice must remain.
The council then wrote to the landlord:
It is difficult therefore to forecast with any precision, but doing the best I can, it would seem that to be required to vacate in March 1997 cuts it too fine, and to vacate in March 1998 may be too long. I appreciate your assistance to date and agree to the two year notice, but ask if this could be given at any time but not earlier than March 1995. We could then gauge with some accuracy when the police should vacate Dencora House…
After the landlord turned down the council's proposal, the council attempted to accept the landlord's 1998 lease break offer by giving notice in 1996. The landlord, however, stated that its previous offer was no longer valid.
As in Hyde v. Wrench (1.2.1), it was held that the letter from the council that was cited above was a rejection of the landlord's offer along with a counter offer. The council's use of the interrogatory language, "but ask if this could be given," prevented the letter from falling into the same category as a simple question as that in Stevenson, Jacques & Co v. McLean (1.2.2). Thus, no agreement to change the conditions of the lease had been made.
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Butler Machine Tool Co Ltd. v. Ex-Cell-O Corporation (England) Ltd. (1977) CA
A Butler Double Column Plane-Miller machine was offered for sale by the plaintiff seller to the defendant buyer on May 23, 1969. The standard terms of the vendor were included in the offer and were printed on the back. Among them was this one: "All orders are accepted only on the terms and conditions stated in our quotation." Any terms and conditions in the buyer's order shall be superseded by these terms and conditions.
The buyer then placed an order with a slip that said, "Please sign and return to Ex-Cell-O," along with the buyer's own regular terms. On the terms and circumstances indicated therein, we accept your order. On June 5th, the seller signed the slip, returned it, and included a covering note that read, "We take pride in confirming receipt of your official order. This is being supplied in compliance with our updated quote from May 23.We have enclosed your well filled order form acknowledgement. "No doubt a contract was then concluded," said Lord Denning. On what terms, though?
The machine was later manufactured by the vendor and given to the purchaser.
One of the seller's stipulations permitted price increases. The buyer refused to pay the seller's higher demand because the buyer's contract prohibited a price modification.
The lesser price was paid since the buyer's terms were upheld. The rationales that followed were stated.
According to Lord Denning MR, "our traditional analysis of offer, counter offer, rejection, acceptance, and so forth is out of date in many of these cases." A better approach would be to review all of the documents that are exchanged between the parties and determine whether or not they agree on all significant matters based on those documents or the parties' actions.
"As a matter of construction...the acknowledgment of June 5, 1969 is the decisive document," he declared. (II) In accordance with Hyde v. Wrench (1.2.1), Lawton and Bridge LJJ determined that the buyer's order constituted a counter offer, canceling the seller's prior offer. (III) Each of their three Lordships concurred that the seller's reference in the letter dated June 5th to the seller's quotation dated May 23rd should be understood to refer to the machine's identity and price, rather than the terms and conditions included in the quotation.
A Butler Double Column Plane-Miller machine was offered for sale by the plaintiff seller to the defendant buyer on May 23, 1969. The standard terms of the vendor were included in the offer and were printed on the back. Among them was this one: "All orders are accepted only on the terms and conditions stated in our quotation." Any terms and conditions in the buyer's order shall be superseded by these terms and conditions.
The buyer then placed an order with a slip that said, "Please sign and return to Ex-Cell-O," along with the buyer's own regular terms. On the terms and circumstances indicated therein, we accept your order. On June 5th, the seller signed the slip, returned it, and included a covering note that read, "We take pride in confirming receipt of your official order. This is being supplied in compliance with our updated quote from May 23.We have enclosed your well filled order form acknowledgement. "No doubt a contract was then concluded," said Lord Denning. On what terms, though?
The machine was later manufactured by the vendor and given to the purchaser.
One of the seller's stipulations permitted price increases. The buyer refused to pay the seller's higher demand because the buyer's contract prohibited a price modification.
The lesser price was paid since the buyer's terms were upheld. The rationales that followed were stated.
According to Lord Denning MR, "our traditional analysis of offer, counter offer, rejection, acceptance, and so forth is out of date in many of these cases." A better approach would be to review all of the documents that are exchanged between the parties and determine whether or not they agree on all significant matters based on those documents or the parties' actions.
"As a matter of construction...the acknowledgment of June 5, 1969 is the decisive document," he declared. (II) In accordance with Hyde v. Wrench (1.2.1), Lawton and Bridge LJJ determined that the buyer's order constituted a counter offer, canceling the seller's prior offer. (III) Each of their three Lordships concurred that the seller's reference in the letter dated June 5th to the seller's quotation dated May 23rd should be understood to refer to the machine's identity and price, rather than the terms and conditions included in the quotation.
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Tinn vs Hoffman & Co. (1873)
On November 24, 1871, the defendant sent the following letter to the plaintiff: "We...offer you 800 tons [of] pig iron...at 69s a ton...delivery 200 tons per month, March, April, May, and June 1872... Awaiting your response via email. The plaintiff responded on November 27, saying, "The price you ask is high," after failing to respond by return. I assume you would reduce the price if I manufactured the quantity 1,200 tons and delivered 200 tons monthly for the first half of the following year?
You will be obliged to respond by return. "We are willing to make you an offer of further 400 tons...pig iron, 200 tons in January, 200 tons in February, at the same price we quoted you by ours of the 24th inst," the defendant said in a letter dated November 28. Please respond by return mail indicating whether you accept our combined offers of 1,200 tons. The plaintiff wrote: "You can enter me 800 tons on the terms and conditions named in your favour of the 24th inst, but I trust you will enter the other 400, making in all 1,200 tons, referred to in my last, at 68s per ton," on the same day that he had not received this last letter. After giving the plaintiff one more chance to purchase for 69s per ton, the defendant declined to sell him any iron since the market price had increased in the interim. The plaintiff reacted later than was necessary.
Held: (I) There was no legally enforceable agreement; (i) The offer dated November 24 was turned down, either because the plaintiff neglected to respond by return or because their letter dated November 27 was a rejection; and (ii) The defendant's letter
On November 24, 1871, the defendant sent the following letter to the plaintiff: "We...offer you 800 tons [of] pig iron...at 69s a ton...delivery 200 tons per month, March, April, May, and June 1872... Awaiting your response via email. The plaintiff responded on November 27, saying, "The price you ask is high," after failing to respond by return. I assume you would reduce the price if I manufactured the quantity 1,200 tons and delivered 200 tons monthly for the first half of the following year?
You will be obliged to respond by return. "We are willing to make you an offer of further 400 tons...pig iron, 200 tons in January, 200 tons in February, at the same price we quoted you by ours of the 24th inst," the defendant said in a letter dated November 28. Please respond by return mail indicating whether you accept our combined offers of 1,200 tons. The plaintiff wrote: "You can enter me 800 tons on the terms and conditions named in your favour of the 24th inst, but I trust you will enter the other 400, making in all 1,200 tons, referred to in my last, at 68s per ton," on the same day that he had not received this last letter. After giving the plaintiff one more chance to purchase for 69s per ton, the defendant declined to sell him any iron since the market price had increased in the interim. The plaintiff reacted later than was necessary.
Held: (I) There was no legally enforceable agreement; (i) The offer dated November 24 was turned down, either because the plaintiff neglected to respond by return or because their letter dated November 27 was a rejection; and (ii) The defendant's letter
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Hyde v. Wrench (1840) RC
For £1000, the defendant offered to sell the plaintiff a farm. The defendant refused the plaintiff's offer to pay £950. Subsequently, the plaintiff claimed to have accepted the initial £1,000. The plaintiff demanded particular performance of the transaction at a cost of £1,000. The defendant declined.
The plaintiff had rejected the initial offer by submitting a counter offer, and an offer's binding effect is nullified upon rejection. As a result, the parties had no formal contract.
For £1000, the defendant offered to sell the plaintiff a farm. The defendant refused the plaintiff's offer to pay £950. Subsequently, the plaintiff claimed to have accepted the initial £1,000. The plaintiff demanded particular performance of the transaction at a cost of £1,000. The defendant declined.
The plaintiff had rejected the initial offer by submitting a counter offer, and an offer's binding effect is nullified upon rejection. As a result, the parties had no formal contract.
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Harvey and Another v Facey and Others (1893) PC
On the same day, three telegrams were exchanged between the parties. Initially, the appellants sent the respondents a telegram asking, "Will you sell us Bumper Hall Pen?" "Telegraph lowest cash price." The respondents said that the Bumper Hall Pen was the lowest priced at £900. The appellants subsequently sent a telegram saying, "We agree to purchase Bumper Hall Pen for the £900 that you have requested." Send us the title deed so we can take control of the property as soon as possible. Due to the respondents' failure to finalize the sale, the appellants requested a particular performance order.
held that no contract existed. According to Lord Morris, the initial telegraph poses two queries.Only the second question was addressed by the replies, who provided his lowest price. The appellants' reply telegram should not be interpreted as an acceptance of their offer to sell them; rather, it is an offer that [the respondents] must accept.
On the same day, three telegrams were exchanged between the parties. Initially, the appellants sent the respondents a telegram asking, "Will you sell us Bumper Hall Pen?" "Telegraph lowest cash price." The respondents said that the Bumper Hall Pen was the lowest priced at £900. The appellants subsequently sent a telegram saying, "We agree to purchase Bumper Hall Pen for the £900 that you have requested." Send us the title deed so we can take control of the property as soon as possible. Due to the respondents' failure to finalize the sale, the appellants requested a particular performance order.
held that no contract existed. According to Lord Morris, the initial telegraph poses two queries.Only the second question was addressed by the replies, who provided his lowest price. The appellants' reply telegram should not be interpreted as an acceptance of their offer to sell them; rather, it is an offer that [the respondents] must accept.