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Offers And Contracts In Harvey v/s Facey

The Indian Contract Act, 1872

  • Section 2(a): When one person signifies to another his willingness to do or to abstain from doing anything, with view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Hence, proposal is synonymous to offer.
  • Section 2(b): When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus, the proposal when accepted becomes a promise.
  • Once the acceptance is communicated it cannot be revoked or withdrawn.
An Invitation to treat (offer): An invitation to treat is a concept in contract law. It refers to an invitation for a party to make an offer enter into contractual negotiations.

Judgment of The Lords of The Judicial Committee of The Privy Council on The Appeal of Harvey and Another V. Facey and Others.

From the Supreme Court of Judicature of Jamaica
Citation: (1893) AC 552
Delivered On: 29th July 1893
Bench: The Lord Chancellor, Lord Watson, Lord Hobhouse, Lord McNaughten, Lord Morris, Lord Shand. [Delivered By Lord Morris]

Law Applied: Offer, Acceptance and Invitation to Treat (Offer) In Contract Law

Harvey v. Facey is an important case in Contract Law. It is an example where the quotation of the price was held not to be an offer. Its importance is that it defined the difference between an offer and supply of information. In this case the Privy Council held that the indication of lowest acceptable price does not constitute an offer to sell, rather is can be considered as an invitation to treat i.e. to enter into any negotiation.

The defendants in this case were the owners of a plot of land, Bumper Hall Pen. The Plaintiffs being interested in purchasing the land so they sent a telegram to the defendants, "Will you sell us Bumper Hall Pen"? Telegraph lowest price." The defendants back the plaintiffs telegraph, telegraphed that lowest price for Bumper Hall Pen, 900. So, the plaintiffs sent another telegram to the defendants that, we agree to buy Bumper Hall Pen for 900 asked by you and please send us your title deeds.

But the defendants refused to sell that land. So, in a suit the plaintiffs contended that the second telegram from the defendants quoting lowest price was an offer and the same had been accepted by the plaintiffs, and the contract was completed. But on the other hand, the defendants contended that quoting the price was not an offer which could be accepted.

The Judicial Committee if the Privy Council held that the exchange of the above stated telegrams had not resulted in a contract. And it was observed that the first telegram had asked two questions, one regarding willingness to sell and another regarding the lowest price. In reply of the telegram only the lowest price was quoted and this quoting of the price was not an offer to sell. The third telegram from the plaintiffs saying that they agree to buy the land and it was only an offer and not the acceptance of an offer. As the offer was not accepted so there was no contract binding between the two parties.

Facts Of The Case
In this case the appellants, Mr. Harvey was professing a partnership business in Kingston, Jamaica and it appeared that come negotiations resolved between the Council of Kingston, Mayor and the respondent Mr. L. M. Facey regarding the sale of latter's property. It was contended that on the 6th of October 1893 the respondent proffered to sell his land for a sum of 900.

The offer of that was discussed by the Council at the meeting. On the next day, the appellant dispatched a telegraph to the respondent while the respondent was travelling through train. The 1st telegraph was "Will you sell us Bumper Hall Pen? Telegraph Lowest cash-price paid;

After reading the telegraph, on the same day the respondent, replied:
Lowest Price for Bumper Hall Pen 900 (Telegraph 2)

And on the very next day, the appellant again telegraph that:
We agree to buy the Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession. (Telegraph 3)
Mr. Facey received the telegraph 3 but he did not reply to that. And later he refused to sell the property for not promising to sell the land. Displeased form it the plaintiff knocked to the doors of Law through Justice Curran and the Justice dismissed the case with costs in favour of the respondents. He dismissed the case affirming that the agreement in question failed to divulge a proper Contract of sale.

The appellants, aggrieved by the order of Justice Curran, moved to the Appeals Court. The Appeals Court overruled the pronouncement rendered by Justice Curran and proclaimed that the existence of a binding contract in the case at hand. And Appeals Court asserted the respondent's incompetency to sell the said property and adjured the latter to pay a damage of 40 shillings to the former for the breach of contract.

But, the lust of for property forced the appellant to obtain leave from the Supreme Court to appeal to her Majesty in Council, and later, procuring special leave from her Majesty in Council to appeal against a point not included in the leave granted by the Supreme Court.

Issues Raised:
The major issues raised from this case are:
  • Was there an explicit offer from Facey to Harvey to sell the land for 900?
  • Was the telegram advising the lowest price an offer capable of acceptance?

Is there is a valid contract concluded?
Answers To The Issues:
No, there was not an explicit offer from Facey to Harvey to sell the land. A proposal or offer cannot be implied by writing, it can only be sound and concrete. So that the appellant cannot imply that Facey made an offer when he, as matter of fact, did not make an offer. A mere statement of the minimum selling price is only an invitation to treat not an offer.

No, the telegram was only an invitation to treat, not a valid offer because it only advised the lowest price of the land, and did not explain any other information. So, the telegram could not create any legal obligation. Harvey's telegraph accepting the 900 was instead an offer which Facey could either reject or accept. Here he rejected that so there was no contract created.

There was no contract concluded between Harvey and Facey because Facey had not directly answered the first question asked by Harvey as to whether they would sell the property or not and only stating the lowest price was merely responding to a request for information which do not constitutes an offer. So, without and offer the question of acceptance would not arise and without offer and acceptance a valid contract cannot be resolved.

The case of Harvey v. Facey is a landmark legal dispute that took place in Jamaica and cantered around contract law. Here are the arguments presented by each party in this case:

Plaintiff (Harvey):

  • Offer and Acceptance: Harvey argued that Facey, the defendant, had made an offer to sell his property (a piece of land) for �900 via telegram. He claimed that he had accepted this offer through a telegram response stating "we agree to buy." Harvey contended that this constituted a valid acceptance of Facey's offer, forming a binding contract between them.
  • Intention to Contract: Harvey asserted that both parties had the intention to enter into a legally binding agreement. He believed that the exchange of telegrams demonstrated a clear intention to finalize the sale of the property at the agreed price.
  • Consideration: Harvey argued that he had provided consideration in the form of the agreed-upon purchase price of �900. In contract law, consideration refers to something of value exchanged between parties, and Harvey claimed that his offer to pay the specified amount constituted valid consideration.

Defendant (Facey):

  • No Binding Offer: Facey argued that his initial telegram was merely an expression of willingness to negotiate the sale of his property, rather than a definite offer. He contended that the wording of his telegram, which stated the price but did not explicitly offer to sell the property, did not constitute a legally binding offer.
  • No Acceptance: Facey claimed that Harvey's telegram response did not amount to a valid acceptance of any offer, as there was no clear and unambiguous agreement on the terms of the sale. He argued that Harvey's response was merely an expression of interest in purchasing the property, rather than a formal acceptance of a specific offer.
  • Lack of Consideration: Facey also argued that even if there was an offer and acceptance, there was no valid consideration exchanged. He claimed that Harvey had not provided any valuable consideration in return for Facey's alleged offer to sell the property, thus rendering any potential contract void.

Ratio Decidendi:
The ratio decidendi, or the legal principle upon which the decision in the case is based, can be summarized as follows:
  1. No Binding Contract: The court held that there was no legally binding contract between the parties. This decision was based on the finding that Facey's initial telegram did not constitute a definite offer to sell the property, and Harvey's response did not amount to a valid acceptance of any offer. Without a clear offer and acceptance, there was no mutual agreement on the terms of the contract, rendering it unenforceable.
  2. Clarity and Certainty: The court emphasized the importance of clarity and certainty in contractual communications. It ruled that the wording of Facey's telegram did not clearly indicate an offer to sell the property but rather expressed a willingness to negotiate. Similarly, Harvey's response was deemed insufficient to constitute a valid acceptance, as it did not clearly and unambiguously agree to the terms proposed by Facey.

Obiter Dicta:
Obiter dicta, or incidental remarks made by the court that are not directly relevant to the decision, may include the following observations or discussions:
  1. Intention to Contract: The court may have discussed the parties' intentions to enter into a legally binding agreement. While this may not have been directly relevant to the decision in this case, the court might have considered whether both parties had a genuine intention to create legal relations, as this is a fundamental aspect of contract formation.
  2. Consideration: The court may have touched upon the concept of consideration in contract law. Although the lack of consideration was not the primary basis for the decision, the court might have discussed whether there was valid consideration exchanged between the parties to support the formation of a contract.

Rule/Law Points Applied
This landmark case laid down the foundation of the concept "invitation to offer", where a person barely pondering upon the notion accepting the offer or not. Simply, we can say that when a person has not intimated his final desire to accept an offer, it is an invitation to offer. This clearly express that it is only mere promulgation of information on the terms on which the person may be willing to negotiate soon. Lack of consensus ad idem between the two parties is the primary reason for which this is not a complete offer.

As for example, the act for displaying cosmetics is only an invitation to offer by the shopkeepers to their customers. If a customer shows her willingness to buy any cosmetic product, then she will approach to the shopkeeper and make an offer to him to buy that desired product at the price. This may or may not be accepted by the shopkeeper.

Thus, invitation to offer merely invites the people of to make an offer to the acceptor and the ultimate say remains with the acceptor to form the invitation to offer to a valid contract or not.

Thus, the acceptance to the offer here made by the customer in the said example will only amount to offer, which may or may not be accepted by the shopkeeper and if the offer accepted by the shopkeeper it will be a valid contract, implying the owner, who quotes the price of a certain property, is always the acceptor.

Applying the aforesaid to the present case, it was the appellant who had made an offer to the acceptor for buying the land, which was unanswered and remained unaccepted though only the lowest price of the property was quoted when it was enquired. Beside this the respondent's intention to form a valid contract is absent here and therefore, absence of a valid offer implies failure to form a valid contract, clearly ruining the sole ambition of the appellants to grab the property.

Thus invitation to offer is not a valid offer which was settled through the medium of this case and succoured resolving divers' cases in years to come and is illuminated below �
indicated that he was willing to sell only the first person accepting, there would be no such problem.

There are few of the many cases where the decision of the case at hand helped in reaching a suitable conclusion, thereby swiftly securing justice to the needy.

Analysis Of Judgment
The honourable Judges Bench reviewed the total matter of this case and upholding the Justice Curran's verdict the Lordships held that the Telegraph 1 asks the respondent this willingness to sell the land and what is the lowest price if that land. But the respondent answered only the second part, and his willingness to sell the property was absent in the telegraph and therefore it cannot be expected to be binding upon him.

Here the Court asserted that through the telegraph 3 the reply from the appellants of cannot be considered an acceptance to the offer to sell them the land. So, the respondent acceptance cannot be granted as a valid contract and actually no acceptance through any form was conveyed by respondent. The Lordships were of the opinion that even if the appellants were to contend the presence of an implied offer to buy the land, only quotation of lowest price of the land by the respondent does not satisfy the requisites of implied contract to sell.

Let's delve deeper into the analysis of the judgement of Harvey v/s Facey case:
  • Interpretation of Communications: The court carefully analysed the telegrams exchanged between Harvey and Facey to determine their legal effect. It scrutinized the wording and context of the messages to ascertain whether they constituted a legally binding offer and acceptance.
  • Offer and Acceptance: The court assessed whether Facey's initial telegram constituted a definite offer to sell the property or merely an invitation to negotiate. It also examined whether Harvey's response amounted to a valid acceptance of any offer, considering whether it unconditionally agreed to the terms proposed by Facey.
  • Objective Standard: The judgment likely applied an objective standard in interpreting the communications, considering how a reasonable person would understand the messages exchanged between the parties. This approach ensures consistency and fairness in contract interpretation.
  • Clarity and Certainty: The court emphasized the importance of clarity and certainty in contractual communications. It sought to determine whether the communications between Harvey and Facey conveyed a clear intention to enter into a legally binding agreement with definite terms.
  • Consideration: Although the lack of consideration may not have been a primary issue in the case, the judgment may have briefly addressed whether there was valid consideration exchanged between the parties to support the formation of a contract.
  • Precedent and Legal Principles: The judgment likely relied on established legal principles and precedents in contract law to reach its decision. It may have referenced relevant case law and legal doctrines to support its analysis and reasoning.
  • Application of Law to Facts: Ultimately, the judgment applied the principles of contract law to the specific facts of the case. It considered the communications between Harvey and Facey in light of legal standards to determine whether a binding contract had been formed.
  • Reasoning and Logic: The judgment likely provided a clear and logical explanation of the court's decision, outlining the reasoning behind its findings and conclusions. It may have addressed counterarguments raised by the parties and explained why they were not persuasive.
  • Legal Significance: The judgment in Harvey v. Facey contributes to the body of contract law by clarifying the requirements for forming a binding contract through offer and acceptance. It provides guidance on interpreting communications between parties and emphasizes the importance of clarity and certainty in contractual agreements.
Overall, the judgment in Harvey v. Facey represents a thorough and reasoned analysis of the legal issues involved, resulting in a decision that upholds the principles of contract law and ensures fairness and consistency in contractual relationships.

In simple words this verdict held that no valid contract was formed due to lack of proper proposal / valid offer. This obvious draws our attention to the concept of valid offer as per Section 2(a) of The Indian Contract Act, 1872, which properly stated that to constitute a valid offer the following Conditions must be fulfilled:
  • The offer must show an obvious intention on the part of the offeror to be bound by it i.e., the offer must signify to the offeree his willingness to do or to abstain from doing something. Thus is X jokingly offers Y Rs. 50 for his typewriter and Y, knowing that Z is not serious, says, "I accept Z's proposal does not constitute an offer.
  • The offeror must make the offer with a view to obtaining the assent of the offeree to such act or abstinence.
  • The offer must be definite, certain and concrete.
  • The offer must be properly communicated to the acceptor (offeree).
  • It must be made with the intention of creating a legal relationship.
Hence, all these requisites must be fulfilled to consider a valid offer. And in this case the owners of the property have every right including the right to sell the property. So however, the respondent furnished no offer regarding the sale of his property and the appellant wrongfully assumed that for quoting the lowest price when enquired and tendered to sell the property. At last, it is proved that the mere quotation of price is not an offer but merely an invitation to offer, which I have already discussed.

An offer is an expression of willingness to be legally bound on certain terms, without further negotiation. A valid and concluded contract requires a proposal and an acceptance of the proposal. And to make a contract binding it is necessary that the proposal must be accepted and also the acceptance of the proposal must be notified to the proposer. A mere statement contains no implied acceptance to hold. This is because a legally enforceable agreement requires certainty to hold.

In conclusion, the case of Harvey v. Facey stands as a pivotal example of contract law jurisprudence, highlighting the importance of clear communication and mutual agreement in the formation of legally binding contracts. The judgment underscores the fundamental principles governing offer and acceptance, emphasizing the need for definitiveness, clarity, and certainty in contractual negotiations.

Through a meticulous analysis of the communications between the parties, the court reached a reasoned decision that there was no binding contract between Harvey and Facey. The judgment elucidated the significance of interpreting contractual communications objectively, considering how a reasonable person would understand the messages exchanged.

Moreover, the case serves as a reminder of the critical role of the courts in interpreting and applying legal principles to resolve disputes and uphold the integrity of contractual relationships. By adhering to established legal standards and precedents, the judgment in Harvey v. Facey contributes to the development of contract law jurisprudence, providing clarity and guidance to parties engaged in contractual negotiations.

Ultimately, the case underscores the importance of vigilance and precision in contractual dealings, urging parties to express their intentions clearly and unambiguously to avoid misunderstandings and disputes. In doing so, it reinforces the principles of fairness, equity, and justice that underpin contract law, ensuring the integrity and enforceability of contractual agreements in the realm of commercial transactions and beyond.

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