Harvey vs. Facey||Case Summary|| 1893 AC 552 (PC)|| Invitation to treat

Invitation to treat

FACTS

Appellants, Mr. Harvey and his associates, were running a partnership business in Kingston, Jamaica. They were in the process of acquiring a plot of land known as Bumper Hall Pen, owned by Mr. Facey, the respondent. Facey was also negotiating the possible sale of the same property to the Mayor and Council of Kingston at the time. On October 6, 1893, a telegram was sent by Harvey to Facey when Facey was traveling by rail. The telegram inquired, "Will you sell us a Bumper Hall Pen? Wire lowest cash price—answer paid. That evening, Facey replied in a mere telegram with, "Lowest price for Bumper Hall Pen £900." Thinking Facey's message was an offer, Harvey cabled another agreeing to buy the house at £900 and asked for the title deed to complete the sale. But Facey would not sell to Harvey. His refusal resulted in a lawsuit by Harvey who alleged that a contract had been made when he agreed to Facey's quoted price.

ISSUES

1. Was Facey's response an offer that could be accepted?

2. Was there a binding contract between Harvey and Facey?

RELEVANT LAWS

Even though the case was determined in the context of English law, it has important application under Indian contract law, especially under Section 2(a) and Section 2(b) of the Indian Contract Act, 1872.

1. Section 2(a) of the Indian Contract Act states that a proposal (offer) is 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."

2. Section 2(b) provides that upon the signification by the party to whom the offer is made of their acceptance, the offer is accepted, giving rise to a promise.

In the case of Harvey vs Facey, Facey's reply did not amount to an offer to sell, i.e., no offer was made under Section 2(a). As no offer was made, there could be no acceptance under Section 2(b), and therefore no contract was established.

KEY CONTRACT PRINCIPLES

1. Offer – One party must make a clear, definite, and explicit offer to the other party. The offer should be such that it indicates the intention of the offeror to enter a contract upon acceptance.

2. Acceptance – The offeree should accept the terms of the offer without any conditions. Acceptance confirms both parties' consent to the terms of the contract and their intention to be bound legally.

3. Intention – There should be an intention between the parties to form legal relations and a legally enforceable agreement. Offer and acceptance are not enough.

4. Communication – There should be valid and appropriate communication of the acceptance and offer between the parties. They should know the contract details.

JUDGEMENT

The Privy Council ruled that there was no binding contract between Harvey and Facey. The first telegram in which Facey mentioned the price was not an offer that can be accepted with the intention to create a contract. Rather, it was simply an invitation to treat. The court held that for a valid contract to exist, there has to be a definite offer with the intent to be legally bound. Facey's telegram did not meet the requirements of an offer under a contract. It was merely quoting a price in reply to Harvey's request. It did not express an intention to create a binding contract. Because Facey's telegram was an invitation to treat and not an offer, Harvey's reply afterwards pretending to accept the price did not form a contract. There was no offer to be accepted. Therefore, the court held no contractual relationship was formed between the parties in this case.

Vinita Pathak