Case Comment on HARVEY v. FACEY

COURT: Privy Council of Jamaica

APPELANT: Harvey & Othrs.

RESPONDENT: Facey & Othrs.

CITATION: (1893) AC 552

BENCH: The Lord Chancellor, Lord Watson, Lord Hobhouse, Lord Macnaghten, Lord Morris, Lord Shand.

[Delivered by Lord Morris]

INTRODUCTION[1]:

It is a significant case in the domain of the law of contract. It is an example of a price quoting that the court declared as no offer. Its significance stems from the fact that it demarcated the distinction between offer & invitation to offer. Ruing that indicating the lowest price held acceptable by a seller does not imply or constitute an offer, the Privy Council held it the quotation of price to be an invitation to treat, i.e. to engage in any negotiation. The Privy Council ruled in this case that indicating the lowest acceptable price does not constitute an offer to sell, but rather an invitation to treat, i.e. to engage in any negotiation.

FACTS OF THE CASE[2]:

The facts of the case are such that, the appellant, Mr. Harvey, was professing a partnership firm in Kingston, Jamaica, and some negotiation was going on between the Council of Kingston, Mayor, and the defendant Mr. Facey concerning the sale of the latter’s property. It was argued that on October 6, 1893, the respondent offered to sell his land for £900 which was discussed by the Council at a meeting. Later on, the other day, Mr. Harvey sent a telegram to the respondent when the respondent was travelling by train. “Will you sell us Bumper Hall Pen?” read the first telegraph. telegraph The lowest cash price paid;”

On the very day after reading the telegram, Mr. Facey replied: “Lowest Price for “Bumper Hall Pen £900” The next day, the appellant through a telegraph, agreed to buy the said property at £900 and asked Mr. Facey to send his title deed. Mr. Facey received the third telegraph, but he did not respond. On being asked to execute the alleged contract, he refused to sell his land since according to him, he had not promised to sell the land. Dissatisfied, the plaintiff approached the Court of Law through Justice Curran, who dismissed the case in favour of Mr. Facey stating that the agreement at question lacked essentials of a valid contract.

The appellant filed an appeal after being dissatisfied with Justice Curran’s decision. The Appeals Court reversed Justice Curran’s decision and declared there was a valid contract between the appellant and the respondent. And the Appeals Court found the respondent unable to sell the property and ordered the latter to pay the former 40 shillings in damages for breach of contract.

However, the appellant remained dissatisfied with the ruling and applied to the Supreme Court to appeal to her Majesty in Council. The Majesty Council upheld the decision of Justice Curran.

THE FOLLOWING ISSUES WERE RAISED[3]:

The primary questions presented by this case are as follows:

1. Was Facey’s offer to Harvey to sell the land for £ 900 explicit?

2. Was the telegram advising the lowest price an acceptable offer?

3. Is there a valid contract in place?

RULE APPLIED: 

Offer, acceptance and invitation to treat (offer) in contract law The Indian Contract Act, 1872 1. Section 2(a) – “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.”[4]

2. 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.”[5]

3. Acceptance once given cannot be revoked.[6]

4. An Invitation to offer or treat –It is a concept where one party exhibits its willingness to buy something and offers the seller in pursuance of it.[7]

This landmark case established the concept of “invitation to offer,” in which a person is unsure whether to accept or decline an offer. Simply put, if a person has not indicated his clear acceptance of an offer, it will be deemed an invitation to treat. The fundamental reason for its not being a comprehensive offer is a lack of ad idem agreement.[8]

Thus, an invitation to offer just invites individuals to approach the acceptor and make an offer, and the acceptor has the final say as to whether the invitation to offer is a valid contract or not.

Thus, an invitation to offer is not a valid offer, which was settled through the medium of this case and aided in settling various issues in the years to come, as shown below –

1. [Carlil V. Carbolic Smoke Ball Co.][9]

The Court of Appeal emphasised that an advertisement exhibits intention to enter into a legal relationship and will only include reimbursement if their advertisement failed to keep its promise. As a result, the advertisement is making an offer to public at large which can be accepted by anyone.

•  [Pharmaceutical Society V. Bootscash Chemist][10]

In this decision, the Honourable Court of Appeal ruled that items shown in a shop, inside or through its window, are just displayed as an offer to treat. It is for the customers to approach the shop and make an offer to buy the item they want.

•  [Partridge V. Crittenden][11]

In this case, the appellant advertised in a magazine, “Bramble finch cocks and hens, 25 shillings each.” He was charged with offering for sale a wild bird in violation of the law, but the High Court acquitted him citing the reason that the advertisement by him was not an offer to sell, but rather an invitation to offer. Since he had a limited stock it was not reasonable on the part of the court to assume he would sell the stock to whoever approached him. There would be no such issue if the advertising stated that he was only willing to sell to the first individual who accepted. There are a few of the many situations where the determination of the case at hand aided in finding an appropriate conclusion, thereby imparting justice to the needy as quickly as possible.

JUDGMENT[12]– The honourable Judges Bench examined the entire case and upheld Justice Curran’s judgement, holding that at first, the respondent was asked if he is willing to sell the land and what the lowest price is for the land. However, the response merely answered the question regarding the lowest price, and there was no mention of will to sell the land, thus it cannot be considered to be binding on him. The Court claimed in this case that the appellants’ response by the third telegraph cannot be interpreted as an acceptance of the offer to sell them the land and hence, no contract was binding on him

The Lordships held that, even if the appellants argued that there was an implied offer to buy the land, the respondent’s reply to the telegram did not fulfill the requirements of an implied contract to sell.

THEREFORE, ISSUES ANSWERED:

1. Writing cannot imply a suggestion or offer; it can only be clear and concrete. As a result, the appellant cannot claim that Facey made an offer when, in reality, he did not. A simple declaration of the minimal selling price is merely an invitation to treat, not an offer.[13]

2. No, the telegram was merely an invitation to treat, not a legal offer, because it only stated the lowest price for the land and provided no other information.[14]

3. Facey had not directly answered Harvey’s first question about whether they would sell the property or not, and simply stating the lowest price was only responding to a request for information, which does not constitute an offer. So, without an offer, the question of acceptance does not arise.[15]

ANALYSIS – In a nutshell, the judgement held that there was no valid contract between both the parties as there was no proper proposal or acceptance.[16] This immediately brings our attention to the concept of valid offer as defined in Section 2(a)[17] of The Indian Contract Act, 1872[18]. Which lays down the following essentials of a valid contract act:

1. The offer must reflect the offeror’s clear intention to be bound by it, i.e. there must be an intention to create a legal obligation/relationship by the offeror. Thus, X makes a funny offer of Rs. 50 to Y for his typewriter, and Y, understanding that Z is not serious, responds, “I accept”. Here, Z’s proposition will not be considered a valid offer.[19]

2. The offer must be made with the intention of obtaining the offeree’s consent to such act or abstain.

3. The offer has to be definite, certain, and clear.

4.  The offer must be lawful.

5. The acceptor must be properly communicated with the offer (offeree).

As a result, all of these conditions must be met in order to consider a valid offer. And in this instance, the property owners enjoy all rights, including the right to sell the land. However, the respondent made no offer to sell his home, and the appellant incorrectly inferred that for quoting the lowest price when questioned about and offered to sell the property.

CONCLUSION:

An offer is an expression of willingness to be legally bound on certain terms, without further negotiation. A proposal and acceptance of the proposal are required for a valid and completed contract. And, in order for a contract to be binding, the proposal has to be accepted and duly communicated to the offeree. There is no implied acceptance to hold in a simple statement. This is due to the fact that a legally binding agreement requires certainty in order to be valid.

The invitation to offer is an abstract concept that was established clearly and precisely by this case, and this concept is evolving through time. In Sanwarmal Goenka vs. Soumyendra Chandra Gooptu(1980)[20] this case was referred. The Appellant sought against a decision of court binding him in a contract where he sends a letter to a broker to find him a suitable buyer and mentioned the lowest price he was willing to accept, and later refused to sell the particular item at the said price. The defendant sued him for breach of contract. Referring to Harvey v. Facey case, it was established that there existed no binding contract as the lowest price mentioned was just an offer to negotiate.

 Now, I must emphasise that the concept of an invitation to offer/treat is distinctive from the principle of an offer, and it has played an important role in understanding the nature of offer.

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[1] Case law on ‘invitation to offer’: Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd.(25/05/2020), LAWLEDGE, https://rb.gy/dignil.

[2] Harvey vs Facey, Jamaica.history, https://rb.gy/vrrb00.

[3] Harvey v Facey, (1893) AC 552.

[4] The Indian Contract Act, 1872, No. 9, Imperial Legislative Council, 1872 (India).

[5] Id.

[6] Louisa Carlill v. Carbolic Smoke Ball Co., (1892) 1 QB 256.

[7] Fisher v. Bell, 1960] 3 All E.R. 731; (1961) 1 Q.B. 394.

[8] See Supra note 5.

[9] See supra note 6.

[10] Case law on ‘invitation to offer’: Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd.(25/05/2020), LAWLEDGE, https://rb.gy/dignil.

[11] Partridge v Crittenden (1968) 2 All ER 4.

[12] Harvey vs Facey, JAMAICA.HISTORY, https://rb.gy/vrrb00.

[13] Harvey v Facey, IPSA LOQUITOR, https://rb.gy/5zaqkf.

[14] https://www.casemine.com/judgement/in/5779f40de561096c9312fdda.

[15] Harvey v Facey(13/02/2020), EXPLORE LAW, https://rb.gy/kabm9v.

[16] The Indian Contract Act, 1872, No. 9, Imperial Legislative Council, 1872 (India).

[17] Id.

[18] See supra note 4.

[19] Harvey v. Facey, JUDICATEME, https://rb.gy/fjfl1j.

[20] Sanwarmal Goenka vs. Soumyendra Chandra Goptu AIR 1981 Cal 37.