Background: The case of Harvey v. Facey is a well-known legal case that deals with issues related to contract law, specifically, the formation of a contract and the distinction between an offer and an invitation to treat.
Harvey v. Facey (1893) AC 552
Facts of the Case: Harvey v. Facey (1893) AC 552
The case involved a series of telegrams exchanged between Mr. Harvey (the appellant) and Mr. Facey (the respondent). Mr. Harvey was interested in purchasing a piece of property owned by Mr. Facey. The relevant telegrams were as follows:
- Mr. Harvey sent a telegram to Mr. Facey, inquiring about the lowest price at which he would sell the property. Mr. Facey responded with a telegram stating, “Lowest price for Bumper Hall Pen £900.”
- In response, Mr. Harvey sent another telegram that read, “We agree to buy Bumper Hall Pen for the £900 asked by you.”
- Mr. Facey replied with a telegram that stated, “We can’t sell for less than £1,000.”
Mr. Harvey filed a lawsuit, claiming that Mr. Facey had breached a contract by refusing to sell the property for £900 as initially stated.
Legal Issue: Harvey v. Facey (1893) AC 552
The primary legal issue in this case was whether a binding contract had been formed between Mr. Harvey and Mr. Facey based on their telegrams, specifically the exchange of offers and acceptances.
Court’s Decision: Harvey v. Facey (1893) AC 552
The Privy Council (the highest court of appeal at that time) held that there was no binding contract between Mr. Harvey and Mr. Facey. The court reasoned that Mr. Facey’s initial telegram stating, “Lowest price for Bumper Hall Pen £900,” was not an offer but rather an invitation to treat.
The court distinguished between an offer and an invitation to treat, stating that an invitation to treat is not capable of acceptance and does not form a contract. In this case, Mr. Facey’s initial telegram was merely an expression of the lowest price at which he might be willing to sell the property but did not constitute an offer to sell at that price.
Mr. Harvey’s telegram, “We agree to buy Bumper Hall Pen for the £900 asked by you,” was not an acceptance of an offer but an offer itself, which Mr. Facey was free to accept or reject. Mr. Facey’s subsequent telegram, stating that he couldn’t sell for less than £1,000, effectively rejected Mr. Harvey’s offer.
Since there was no valid offer and acceptance resulting in a contract, Mr. Facey was not bound to sell the property for £900, and he had not breached any contract.
- Invitation to Treat: The case underscores the distinction between an offer and an invitation to treat. An invitation to treat is not a firm offer but an indication of willingness to negotiate.
- Offer and Acceptance: For a contract to be formed, there must be a clear offer by one party and an unqualified acceptance by the other party. Mere negotiations or expressions of interest are not sufficient to create a contract.
- Communication of Acceptance: Acceptance must be communicated to the offeror to form a contract. Silence or inaction generally does not constitute acceptance.
- No Contract, No Breach: If there is no valid contract, there can be no breach of contract. Parties are only bound by the terms of a contract once it is formed.
In Conclusion : Harvey v. Facey (1893) AC 552
Harvey v. Facey is a notable case that highlights the importance of understanding the distinction between an offer and an invitation to treat in contract law. It clarifies that an invitation to treat does not constitute a binding contract, and parties are not bound until a clear offer is made and accepted.