Case Facts
The defendant owned a farm at Luddenham and initially offered to sell it for £1,200 through his agent. The plaintiff declined this offer. On 6 June, the defendant made a second written offer to sell the farm for £1,000, stating it was his final offer, which he would not alter, and requesting a reply by return post.
Rather than accepting the £1,000 offer unconditionally, the plaintiff's agent put forward a counter-offer of £950 for the farm. The defendant asked for a few days to consider. On 11 June, the defendant wrote to the plaintiff's agent stating that he was awaiting his tenant's reply and would endeavour to conclude the prospective purchase, assuring the plaintiff that he was not treating with any other person.
On 27 June, the defendant wrote to the plaintiff's agent expressly stating that he was sorry he could not feel disposed to accept the offer of £950 for the farm at Luddenham. On 29 June, upon receiving this letter of refusal, the plaintiff's agent wrote purporting to accept the defendant's original £1,000 offer of 6 June. The defendant gave a verbal answer to the effect that he would see his solicitor. The plaintiff's bill charged that the defendant's original offer had not been withdrawn prior to its purported acceptance on 29 June.
The plaintiff brought a bill for specific performance of the alleged contract before the Court of Chancery. The matter came before the court on a general demurrer to that bill.
Held
The demurrer was allowed and the bill for specific performance was dismissed. The court held that there was no binding contract between the parties within the Statute of Frauds.
The court reasoned that had the plaintiff unconditionally accepted the defendant's offer of £1,000 at the outset, a perfect and binding contract would undoubtedly have arisen. Instead, the plaintiff made an offer of his own to purchase the property for £950, and in doing so he rejected the offer previously made by the defendant. It was not thereafter competent for the plaintiff to revive the defendant's original proposal by purporting to tender an acceptance of it. Accordingly, no obligation of any sort existed between the parties.
Ratio Decidendi
The ratio of this case is that a counter-offer operates as a rejection of the original offer, which is thereby destroyed and cannot subsequently be accepted. When an offeree responds to an offer by proposing different terms — here, a price of £950 in response to an offer of £1,000 — that response constitutes a counter-offer, not an acceptance. The original offer is extinguished at that point and does not survive for future acceptance.
This principle is foundational to the law of contract formation in English law. It ensures that a contract can only come into existence where there is a precise and unconditional acceptance of an offer. An offeree cannot hold an offer open while simultaneously making a counter-proposal, and cannot subsequently revert to accepting the original offer once that counter-offer has itself been refused.
This case is usefully contrasted with Stevenson v McLean (1880), where the court distinguished between a counter-offer, which destroys the original offer, and a mere request for information or clarification, which does not. In Stevenson v McLean (1880), an inquiry as to whether the offeror would accept payment by instalments was held not to constitute a counter-offer, leaving the original offer open for acceptance. The comparison between the two cases illustrates that the critical question is whether the offeree's response proposes new terms or merely seeks further information.
The principle from this case also applies in more complex commercial negotiations, as illustrated by Butler Machine Tool v Ex-Cell-O [1979], where competing standard form documents were analysed to determine which, if any, constituted the final and binding offer accepted by conduct.
Obiter Dicta
Not applicable.