Introduction
This advice will consider whether Alex has formed a legally binding contract with either Betty or Cecil for the sale of his furniture. To form a valid contract, there must be a clear offer which is met with an unqualified acceptance before the offer is terminated or lapses (Treitel, 2020). The facts present two distinct scenarios, one involving a potential counter-offer and the other concerning a request for information and the timing of acceptance. The position of Betty and Cecil will be analysed separately to determine if either has a claim against Alex for breach of contract.
Alex and Betty
The first issue is whether a contract was formed between Alex and Betty. Alex’s letter to Betty constitutes a unilateral offer, as it is made to a specific person and expresses a clear intention to be bound by the stated terms, namely the sale of furniture for $10,000 (Storer v Manchester City Council [1974] 1 WLR 1403). The offer specifies that it will remain open until 5pm on Monday.
The crucial point is the legal effect of Betty’s telephone call on Monday morning. Betty asked if she could pay $8,000 for the furniture. The law distinguishes between a counter-offer and a mere request for further information. A counter-offer proposes new terms and, in doing so, destroys the original offer, making it incapable of subsequent acceptance. The leading case is Hyde v Wrench (1840) 49 ER 132, where an offer to sell a farm for £1,000 was met with a new offer to purchase for £950. This was held to be a counter-offer which terminated the original offer. By contrast, a request for information seeks to clarify the terms of the offer without proposing new ones and leaves the original offer intact (Stevenson, Jacques & Co v McLean (1880) 5 QBD 346).
Here, Betty’s query was not about the terms of payment but an attempt to vary a fundamental term: the price. By suggesting a lower price of $8,000, she was not clarifying the original offer but proposing a new one. This is functionally identical to the facts of Hyde v Wrench, and therefore it must be concluded that her telephone call was a counter-offer. Alex’s immediate rejection of the $8,000 price solidifies the termination of his original offer.
Consequently, when Betty later delivered a letter stating she accepted the $10,000 price at 1pm, there was no longer an offer for her to accept. Her letter, in legal terms, constitutes a fresh offer to Alex to purchase the furniture for $10,000. Alex was under no obligation to accept this new offer and his subsequent refusal and sale to Debbie means no contract was ever formed with Betty.
Alex and Cecil
The second issue is whether a binding contract was formed between Alex and Cecil. Similar to the situation with Betty, Alex’s letter to Cecil was a valid offer open until 5pm on Monday.
On Monday morning, Cecil sent a fax asking if payment could be in "cheque or cash". This is different from Betty’s communication. Cecil did not attempt to change the price or any other key term. Instead, he enquired about the method of performance. This is a classic example of a request for further information, akin to the query about delivery times in Stevenson, Jacques & Co v McLean. Such a request does not reject the offer, which therefore remained open for Cecil to accept. Alex’s failure to reply to the fax is irrelevant, as he was not obliged to respond to the query.
The offer made by Alex specified that it would be open "until Monday at 5pm". An offeror is entitled to set a time limit for acceptance, and if the offer is not accepted within that period, it automatically lapses and can no longer be accepted (Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109). Cecil attempted to accept the offer by handing Alex a letter of acceptance at 7pm on Monday. This was two hours after the 5pm deadline had passed.
Acceptance must be made while the offer is still live. As Cecil’s acceptance was communicated after the offer had expired, it was ineffective. Therefore, no contract was concluded between Alex and Cecil.
Conclusion
In conclusion, Alex does not have a binding contract with either Betty or Cecil. In Betty’s case, her counter-offer to pay a lower price destroyed Alex’s original offer, meaning her subsequent attempt at acceptance was merely a new offer which Alex was free to reject. In Cecil’s case, while his request for information left the original offer intact, his acceptance was communicated after the offer had lapsed due to the expiry of the time limit set by Alex. As no contract was formed with either party, Alex was legally entitled to sell his furniture to Debbie for $15,000 without incurring any liability to Betty or Cecil.
References
McKendrick, E. (2020) Contract Law: Text, Cases, and Materials. 9th edn. Oxford University Press.
Hyde v Wrench (1840) 49 ER 132
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
Stevenson, Jacques & Co v McLean (1880) 5 QBD 346
Storer v Manchester City Council [1974] 1 WLR 1403 CA
