Brogden v Metropolitan Railway (1877) 2 App. Cas. 666
The claimants were the suppliers of coal to the defendant railway company. They had been dealing for some years on an informal basis with no written contract. The parties agreed that it would be wise to have a formal contract written. The defendant drew up a draft contract and sent it to the claimant. The claimant made some minor amendments and filled in some blanks and sent it back to the defendant. The defendant then simply filed the document and never communicated their acceptance to the contract. Throughout this period the claimants continued to supply the coal. Subsequently a dispute arose and it was questioned whether in fact the written agreement was valid.
Held:
The written contract was valid despite no communication of the acceptance. The acceptance took place by performing the contract without any objection as to the terms.
Thursday, 6 May 2010
Felthouse v Bindley [1862] EWHC CP J35
Felthouse v Bindley [1862] EWHC CP J35
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don't hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether a valid contract existed between the nephew and the uncle.
Held:
There was no contract. You can not have silence as acceptance.
A nephew discussed buying a horse from his uncle. He offered to purchase the horse and said if I don't hear from you by the weekend I will consider him mine. The horse was then sold by mistake at auction. The auctioneer had been asked not to sell the horse but had forgotten. The uncle commenced proceedings against the auctioneer for conversion. The action depended upon whether a valid contract existed between the nephew and the uncle.
Held:
There was no contract. You can not have silence as acceptance.
Tuesday, 4 May 2010
Entorres v Miles Far East [1955] 2 QB 327
Entorres v Miles Far East [1955] 2 QB 327
Entores was a London-based trading company that sent an offer for the purchase of copper cathodes by telex from a company based in Amsterdam.
The Dutch company sent an acceptance by telex.
The contract was not fulfilled by the Dutch Company and so Entores attempted to sue the owner of the Dutch company for damages.
The controlling company, Miles Far East Corp., was based in the U.S. and so Entores could only bring the action in the U.S. if it could be found that the contract was formed in London rather than Amsterdam.
It was held that the contract was formed in London. The instantaneous nature of telex meant that regular rules of acceptance by post did not apply. The general principle that acceptance takes place when communicated applies to all instantaneous forms of communication.
Entores was a London-based trading company that sent an offer for the purchase of copper cathodes by telex from a company based in Amsterdam.
The Dutch company sent an acceptance by telex.
The contract was not fulfilled by the Dutch Company and so Entores attempted to sue the owner of the Dutch company for damages.
The controlling company, Miles Far East Corp., was based in the U.S. and so Entores could only bring the action in the U.S. if it could be found that the contract was formed in London rather than Amsterdam.
It was held that the contract was formed in London. The instantaneous nature of telex meant that regular rules of acceptance by post did not apply. The general principle that acceptance takes place when communicated applies to all instantaneous forms of communication.
Tuesday, 27 April 2010
Hyde v Wrench (1840) 49 ER 132
Hyde v Wrench (1840) 49 ER 132
Facts
Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks.
Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of contract and sought specific performance, contending that Wench’s offer had not been withdrawn prior to acceptance.
Issue
If one party makes an offer and the offeree makes a counteroffer, does the original offer remain open?
Holding and Rule
No. A counteroffer negates the original offer.
Kindersely and Keene
To constitute a valid contract there must be a simple acceptance of the terms proposed. Hyde rejected the defendant’s offer to sell and made a counter proposal which terminated the offer. The offer was never accepted and cannot be revived later.
Pemberton and Freeling
Wrench’s offer had not been withdrawn before Hyde accepted it and his acceptance created a binding contract.
The Master of the Rolls (Lord Langdale)
By making a counteroffer, the plaintiff rejected the original offer and he was not entitled to revive it. Under these facts the parties did not form a binding contract.
Disposition
Judgment for Wrench.
Facts
Wrench (D) offered to sell his estate to Hyde for 1200 pounds and Hyde (P) declined. Wrench then made a final offer to sell the farm for 1000 pounds. Hyde in turn offered to purchase the property for 950 pounds and Wrench replied that he would consider the offer and give an answer within approximately two weeks.
Wrench ultimately rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell the real estate for 1000 pounds. Wrench refused and Hyde sued for breach of contract and sought specific performance, contending that Wench’s offer had not been withdrawn prior to acceptance.
Issue
If one party makes an offer and the offeree makes a counteroffer, does the original offer remain open?
Holding and Rule
No. A counteroffer negates the original offer.
Kindersely and Keene
To constitute a valid contract there must be a simple acceptance of the terms proposed. Hyde rejected the defendant’s offer to sell and made a counter proposal which terminated the offer. The offer was never accepted and cannot be revived later.
Pemberton and Freeling
Wrench’s offer had not been withdrawn before Hyde accepted it and his acceptance created a binding contract.
The Master of the Rolls (Lord Langdale)
By making a counteroffer, the plaintiff rejected the original offer and he was not entitled to revive it. Under these facts the parties did not form a binding contract.
Disposition
Judgment for Wrench.
Dahlia v Four Millbank [1978] Ch 231
Dahlia v Four Millbank [1978] Ch 231 In this case potential purchasers were told that if they could produce a bank draft for a certain amount of money by 10 am the following day, they could buy a property. When the plaintiffs tried to hand over the draft before the deadline the defendants changed their minds and duly refused to accept the draft or complete the deal.
Held: There is an implied obligation for the offeror not to prevent the condition becoming satisfied. The obligation must arise as soon as the offeree starts to perform. However, until then the offeror can revoke, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.
Held: There is an implied obligation for the offeror not to prevent the condition becoming satisfied. The obligation must arise as soon as the offeree starts to perform. However, until then the offeror can revoke, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.
Errington v Errington Wood [1952] 1 KB 290
Errington v Errington Wood [1952] 1 KB 290
FactsFather bought a house for his son and daughter-in-law. He paid _250 as a down-payment, and put the title of the house in his name. He told his daughter-in-law that if they paid off the remaining mortgage (_500) in weekly instalments, he would transfer the title to them when the house was completely paid for. He died before they paid it all off. The late Father's widow then sued for the house.
IssueDoes the young couple have a contractual right to continue paying instalments, and upon completion of payments, take title of the house? Does their agreement remain binding despite the father's death?
RatioWithin a unilateral contract, there is an implied promise not to revoke once performance has commenced.
The father's promise was a unilateral contract. It could not be revoked by him once the couple entered on performance of the act. As long as the young couple fulfill their side of the contract (continue paying instalments), the contract remains binding, and they will have the property transferred to them once the payments are completed.
This judgement protects the interest of the party who is acting on the promise of the offeror.
HeldJudgement for the Defendant. Appeal dismissed.
IssueDoes the young couple have a contractual right to continue paying instalments, and upon completion of payments, take title of the house? Does their agreement remain binding despite the father's death?
RatioWithin a unilateral contract, there is an implied promise not to revoke once performance has commenced.
The father's promise was a unilateral contract. It could not be revoked by him once the couple entered on performance of the act. As long as the young couple fulfill their side of the contract (continue paying instalments), the contract remains binding, and they will have the property transferred to them once the payments are completed.
This judgement protects the interest of the party who is acting on the promise of the offeror.
HeldJudgement for the Defendant. Appeal dismissed.
Dickinson v Dodds (1876) 2 Ch. D. 463
Dickinson v Dodds (1876) 2 Ch. D. 463
On Wednesday, the 10th of June, 1874, the Defendant John Dodds signed and delivered to the Plaintiff, George Dickinson, a memorandum, of which the material part was as follows:
I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of ˆÇ¬£800. As witness my hand this tenth day of June, 1874.
ˆØ¬ø¬‡ (Signed) John Dodds.
P.S.-This offer to be left over until Friday, 9 o'clock, a.m. J.D. (the twelfth), 12th June, 1874.
(Signed) J. Dodds.
The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M. within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of ˆÇ¬£800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.
In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.
On the following (Friday) morning, at about seven o'clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, "You are too late. I have sold the property."
It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for ˆÇ¬£800, and had received from him a deposit of ˆÇ¬£40.
The bill in this suit prayed that the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.
The cause came on for hearing before Vice Chancellor Bacon on the 29th of January, 1876 [who decreed specific performance for the plaintiff. From this decision the defendants appeal].
James, L.J., after referring to the document of the 10th of June, 1874, continued:
The document, though beginning, "I hereby agree to sell," was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff being minded not to complete the bargain at that time adds this memorandum: "This offer is to be left over until Friday, 9 o'clock a.m. 12th June 1874. "That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer." It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the offer." This is evidence from the Plaintiff's own statements in the bill.
The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring to bind him, "I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper." It is to my mind quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.
I hereby agree to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, stabling, and outbuildings thereto belonging, situate at Croft, belonging to me, for the sum of ˆÇ¬£800. As witness my hand this tenth day of June, 1874.
ˆØ¬ø¬‡ (Signed) John Dodds.
P.S.-This offer to be left over until Friday, 9 o'clock, a.m. J.D. (the twelfth), 12th June, 1874.
(Signed) J. Dodds.
The bill alleged that Dodds understood and intended that the Plaintiff should have until Friday 9 A.M. within which to determine whether he would or would not purchase, and that he should absolutely have until that time the refusal of the property at the price of ˆÇ¬£800, and that the Plaintiff in fact determined to accept the offer on the morning of Thursday, the 11th of June, but did not at once signify his acceptance to Dodds, believing that he had the power to accept it until 9 A.M. on the Friday.
In the afternoon of the Thursday the Plaintiff was informed by a Mr. Berry that Dodds had been offering or agreeing to sell the property to Thomas Allan, the other Defendant. Thereupon the Plaintiff, at about half-past seven in the evening, went to the house of Mrs. Burgess, the mother-in-law of Dodds, where he was then staying, and left with her a formal acceptance in writing of the offer to sell the property. According to the evidence of Mrs. Burgess this document never in fact reached Dodds, she having forgotten to give it to him.
On the following (Friday) morning, at about seven o'clock, Berry, who was acting as agent for Dickinson, found Dodds at the Darlington railway station, and handed to him a duplicate of the acceptance by Dickinson, and explained to Dodds its purport. He replied that it was too late, as he had sold the property. A few minutes later Dickinson himself found Dodds entering a railway carriage, and handed him another duplicate of the notice of acceptance, but Dodds declined to receive it, saying, "You are too late. I have sold the property."
It appeared that on the day before, Thursday, the 11th of June, Dodds had signed a formal contract for the sale of the property to the Defendant Allan for ˆÇ¬£800, and had received from him a deposit of ˆÇ¬£40.
The bill in this suit prayed that the Defendant Dodds might be decreed specifically to perform the contract of the 10th of June, 1874; that he might be restrained from conveying the property to Allan; that Allan might be restrained from taking any such conveyance; that, if any such conveyance had been or should be made, Allan might be declared a trustee of the property for, and might be directed to convey the property to, the Plaintiff; and for damages.
The cause came on for hearing before Vice Chancellor Bacon on the 29th of January, 1876 [who decreed specific performance for the plaintiff. From this decision the defendants appeal].
James, L.J., after referring to the document of the 10th of June, 1874, continued:
The document, though beginning, "I hereby agree to sell," was nothing but an offer, and was only intended to be an offer, for the Plaintiff himself tells us that he required time to consider whether he would enter into an agreement or not. Unless both parties had then agreed there was no concluded agreement then made; it was in effect and substance only an offer to sell. The plaintiff being minded not to complete the bargain at that time adds this memorandum: "This offer is to be left over until Friday, 9 o'clock a.m. 12th June 1874. "That shows it was only an offer. There was no consideration given for the undertaking or promise, to whatever extent it may be considered binding, to keep the property unsold until 9 o'clock on Friday morning; but apparently Dickinson was of opinion, and probably Dodds was of the same opinion, that he (Dodds) was bound by that promise, and could not in any way withdraw from it, or retract it, until 9 o'clock on Friday morning, and this probably explains a good deal of what afterwards took place. But it is clear settled law, on one of the clearest principles of law, that this promise, being a mere nudum pactum, was not binding, and that at any moment before a complete acceptance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said that the only mode in which Dodds could assert that freedom was by actually and distinctly saying to Dickinson, "Now I withdraw my offer." It appears to me that there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to constitute a contract, appear that the two minds were at one, at the same moment of time, that is, that there was an offer continuing up to the time of the acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Of course it may well be that the one man is bound in some way or other to let the other man know that his mind with regard to the offer has been changed; but in this case, beyond all question, the Plaintiff knew that Dodds was no longer minded to sell the property to him as plainly and clearly as if Dodds had told him in so many words, "I withdraw the offer." This is evidence from the Plaintiff's own statements in the bill.
The Plaintiff says in effect that, having heard and knowing that Dodds was no longer minded to sell to him, and that he was selling or had sold to some one else, thinking that he could not in point of law withdraw his offer, meaning to fix him to it, and endeavoring to bind him, "I went to the house where he was lodging, and saw his mother-in-law, and left with her an acceptance of the offer, knowing all the while that he had entirely changed his mind. I got an agent to watch for him at 7 o'clock the next morning, and I went to the train just before 9 o'clock, in order that I might catch him and give him my notice of acceptance just before 9 o'clock, and when that occurred he told my agent, and he told me, you are too late, and he then threw back the paper." It is to my mind quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind, and that he had in fact agreed to sell the property to Allan. It is impossible, therefore, to say that there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement. I am of opinion, therefore, that the Plaintiff has failed to prove that there was any binding contranct between Dodds and himself.
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