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- Once the acceptance is communicated it cannot be revoked or withdrawn.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
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 Macnaghten, 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.
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. An
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 a offer. So
without and offer the question of acceptance would not arise and without offer
and acceptance a valid contract can not be resolved.
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
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
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 honorable 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.
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
It must be made with the intention of creating a legal
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
sell 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.
Here, in this case invitation to offer is an abstract concept which was realized
clearly and expressly and this concept is improvising over the period of time.
Now, I must say that the principle of invitation to offer is clearly
distinguishable from an offer and it has played a crucial role to understand the
nature of an offer.