BetterLawNotes-5 (2)

CONTRACT LAW

There is less scope here for a presumption either way: the court will construe the correspondence and each case will turn on its own facts.

Harvey v Facey [1893] AC 552

Mr and Mrs Facey wanted to sell their property, known as Bumper Hall Pen. The prospective buyers sent a telegram to Mr Facey which stated: “Will you sell us Bumper Hall Pen? Telegraph lowest cash price – answer paid.” Mr Facey replied by telegram: “Lowest price for Bumper Hall Pen £900.” The buyers then replied with a further telegram: “We agree to buy Bumper Hall Pen for the sum of £900 asked by you.” The court held that this exchange of telegrams did not give rise to a contract. The first telegram had asked two questions and Mr Facey had only answered the second. It followed that Mr Facey had not made any offer to sell. The buyers’ second telegram was therefore an offer (to buy) and not an acceptance (of an offer to sell).

A more recent example is provided by the decision in Gibson v Manchester City Council.

Gibson v Manchester City Council [1979] 1 WLR 294

The Council was engaged in the process of selling off its council houses to sitting tenants at favourable prices. The Council wrote to Gibson and said that it “may be prepared to sell” the house which Gibson occupied at a certain price. But following elections, the Council changed its policy and resolved to proceed only with those sales where binding contracts had been entered into. Gibson claimed he had such a contract. The House of Lords held that the Council had never made any offer capable of being converted into a contract by any ‘acceptance’ by Gibson. 

‘[T]here may be certain types of contract, though I think they are exceptional, which do not fit easily into the normal analysis of a contract as being constituted by offer and acceptance; but a contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first are in reply to one another, is not one of these.  I can see no reason in the instant case for departing from the conventional approach of looking at the handful of documents relied upon as constituting the contract sued upon and seeing whether upon their true construction there is to be found in them a contractual offer by the corporation to sell the house to Mr Gibson and an acceptance of that offer by Mr Gibson.’ (Lord Diplock at 297).

You cannot copy content of this page