Stevenson v McLean - An enquiry to an offer is not a counter offer and does not destroy the
original offer
Ramsgate v Montefiore - Reasonable time for an offer to lapse would depend on subject
matter. (In this case six months was the reasonable time before automatic expiration of offer)
Payne v Cave - An offer can be revoked / cancelled at any time before its accepted
Felthouse v Bindley - Silence cannot amount to acceptance. Acceptance should be
communicated
Felthouse v Bindley
Facts of Felthouse v Bindley:
The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse, about
buying his horse. After their discussion, the uncle replied by letter stating that if he didn’t hear
anymore from his nephew concerning the horse, he would consider acceptance of the order
done and he would own the horse. His nephew did not reply to this letter and was busy at
auctions. The defendant, Mr Bindley, ran the auctions and the nephew advised him not to sell
the horse. However, by accident he ended up selling the horse to someone else.
Issues in Felthouse v Bindley:
Paul Felthouse sued Mr Bindley in the tort of conversion, with it necessary to show that the
horse was his property, in order to prove there was a valid contract. Mr Bindley argued there
was no valid contract for the horse, since the nephew had not communicated his acceptance of
the complainant’s offer. The issue in this case was whether silence or a failure to reject an offer
amount to acceptance.
Decision / Outcome of Felthouse v Bindley:
It was held that there was no contract for the horse between the complainant and his nephew.
There had not been an acceptance of the offer; silence did not amount to acceptance and an
obligation cannot be imposed by another. Any acceptance of an offer must be communicated
clearly. Although the nephew had intended to sell the horse to the complainant and showed this
interest, there was no contract of sale. Thus, the nephew’s failure to respond to the complainant
did not amount to an acceptance of his offer.
Stevenson Jacques & Co v Mclean
Facts:
The defendant, Mclean, offered to sell iron to the complainant, Stevenson Jaques & Co. This
was for the price of 40s and the offer would remain open until Monday. The complainant sent a
telegram to the defendant, asking whether he would accept a payment of 40 over a two-month
period, or what his longest limit would be for payment. McLean did not respond to this telegram.
The defendant sold the iron to another party, but did not inform the complainant of this action.
On Monday morning, the complaint sent a telegram to accept the offer, unware it had been sold.
Issues:
The complainant sued the defendant for non-delivery of the iron and that this was a breach of
contract. The issue in the case was whether there was binding contract between the parties and
if the telegram sent by the complainant was an inquiry for information or a counter offer.
Decision/Outcome:
The court heard the complainant was only inquiring for more information about whether the
terms of the offer could be changed; there was no specific wording to indicate that it was a
counter offer or rejection. This was in contrast to Hyde v Wrench. This meant that the offer
made by the defendant was still valid and the second telegram by the complaint formed a
binding contract. While the promise of the offer remaining open until Monday was not itself
binding and an offeror can revoke this at any time, there had been no revocation communicated
to the complainant in this case.
Payne v Cave (1789)
The defendant made the highest bid for the plaintiff’s goods at an auction sale, but he withdrew
his bid before the fall of the auctioneer’s hammer. It was held that the defendant was not bound
to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any
time before the auctioneer signified acceptance by knocking down the hammer.
Stevenson v McLean (1880)
On Saturday, the defendant offered to sell iron to the plaintiff at 40 shillings a ton, open until
Monday. On Monday at 10am, the plaintiff sent a telegram asking if he could have credit terms.
At 1.34pm the plaintiff sent a telegram accepting the defendant’s offer, but at 1.25pm the
defendant had sent a telegram: ‘Sold iron to third party’ arriving at 1.46pm. The plaintiff
sued the defendant for breach of contract and the defendant argued that the plaintiff’s
telegram was a counter-offer so the plaintiff’s second telegram could not be an acceptance.
It was held that the plaintiff’s first telegram was not a counter-offer but only an enquiry, so a
binding contract was made by the plaintiff’s second telegram.
Ramsgate v Montefiore (1866)
On 8 June, the defendant offered to buy shares in the plaintiff company. On 23 Nov, the plaintiff
accepted but the defendant no longer wanted them and refused to pay. It was held that the six-
month delay between the offer in June and the acceptance in November was unreasonable and
so the offer had ‘lapsed’, ie it could no longer be accepted and the defendant was not liable for
the price of the shares.
