Felthouse v Bindley: Facts, Issues and Judgment of Court

Felthouse v Bindley [1862] EWHC CP J35: Facts, issues and Judgment of Court: For a contract to be formed, the elements of offer, acceptance, consideration and an intention to create legal relations must be existent.

Where an offer is made by one party, acceptance  is made by another to form a contractual relationship.

When is one said to have accepted an offer?

Acceptance happens when assent is given to the terms of an offer. According to Tobi JCA., in the Nigerian cases of Orient Bank (Nig) Plc v Bilante International Ltd., acceptance is a reciprocal action by the offeree where he indicates his agreement to the terms of the offer.

There are various actions that seem to be acceptance of an offer, but which really are not, on examination. They are invalid types of acceptance. They include, counter-offer, conditional acceptance (that is, acceptance subject to contract), cross offers, acceptance in ignorance of offer and acceptance of tenders.

Where acceptance does not correspond with the terms of the offer made by the offeror, such is not an acceptance, but rather, a counter offer. The offeree has to agree with the terms of the offer for it to be a valid acceptance. Acceptance thus, has to be unequivocal and without variance. It must also be plain, unconditional and communicated to the offeror. The difference between an acceptance and a counter-offer was highlighted in the case of Major General George Innih (RTD) & Ors v Ferado Agro and Consortium Ltd.

Felthouse v Bindley: Facts, Issues and Judgment of Court
Felthouse v Bindley: Facts, Issues and Judgment of Court

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In a case where an agreement is subject to contract, there is usually no contract until a formal contract has been made. Thus, it does not constitute acceptance.

Cross offer occurs when two parties make offers to each other ignorant of the other party’s intention to make an offer. Neither one of the offers constitutes an acceptance.

Another invalid acceptance is where it is done in ignorance of offer.

In the case of Gibbons v Proctor, it was held that the plaintiff who supplied information about a person who assaulted a girl was entitled to a reward, despite the fact that he had supplied the information before he knew about the offer of that reward. The decision was greatly criticized. It has been agreed that rather, the principle in Fitch v. Snedaker which states that one cannot accept an offer he does not know about, is the correct principle of law.

It is a principle of law that the advertisement of tenders is just an invitation to treat and not an offer. Thus, where a tender is accepted, there is no valid acceptance as there was no offer in the first place.

Acceptance can be constituted by conduct, by words or in the form of documents that pass between the parties.

Acceptance has to be clear and unqualified and this is even more so where acceptance is done by conduct.

Thus, where acceptance is done in any of the forms above, there has to be an external manifestation from which the court can infer an acceptance and which will be regarded as a communication of such acceptance.

The case of Felthouse v Bindley expounds the principle that acceptance is not an internal factor. It is not constituted by one’s intention to accept and cannot be constituted by silence.

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Fact summary of Felthouse v Bindley

In this case, the plaintiff, Paul Felthouse, who was an uncle to  John Felthouse, made a written offer to his nephew to buy his horse. He also added that an absence of reply from the defendant would be regarded as an acceptance.

The nephew, after receiving the written offer intended to accept the offer but did not communicate such intention to the plaintiff. He rather instructed William Bindley, his auctioneer, the defendant, to reserve the horse which his uncle offered to buy. The auctioneer, forgetting the instruction, auctioned the horse in the auction.

The defendant, on realizing his mistake, wrote a letter of apology to the plaintiff, promising that he would try to buy the horse back from the person it was auctioned to. On the 27th of February 1861, the plaintiff’s nephew wrote a letter to him, also apologizing for the sale and offering to give him his own horse. The plaintiff sued the defendant, the auctioneer, for conversion, contending that his nephew’s silence constituted an acceptance, and so he was bound by the contract and the horse already belonged to the plaintiff.

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Issues determined

Whether or not silence can constitute a valid acceptance. Whether the plaintiff has title to the horse sold by the defendant and whether there is a conversion of the horse in question.

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Decision of the court in Felthouse v Bindley

The court, in this case, dismissed the suit as it held that there was no conversion of the horse as the plaintiff had no title in the horse at the time of its sale. Silence does not constitute an acceptance. Even though there was an intention to accept, the defendant had not communicated such intention and thus could not be bound.

Fact Summary of Felthouse v Bindley
Fact Summary of Felthouse v Bindley

For one to accept an offer validly, such acceptance has to be communicated.

The court stated that the letter of 27th February 1861 was not admissible as evidence against the defendant and that even if it was admissible, it would not confer title over the horse, on the plaintiff.

Willes J. stated that at the time the letters passed between Paul Felthouse and John Felthouse, they were still negotiating. The price offered by the uncle in his last letter remained an open offer until the sale was made. Even though the nephew had intended to reserve the horse for his uncle, he had done nothing to bind himself as he communicated no acceptance, and thus, nothing vested the property in the horse in his uncle, the plaintiff, to give him a right of action to sue for conversion.

Willes J stated that subsequent correspondences between the parties amounted to nothing and had no effect on the right of the plaintiff. He stated that the only thing that the letter of 27th of February by the nephew proved was that the nephew was for the first time, accepting the negotiated offer and such acceptance was made after the sale had already been made. Byles J and Keating J agreed with the decision of Willes J.

Citing the case of Coats v Chaplin, Willes J. stated that if John Felthouse, the plaintiff’s nephew, had sued the auctioneer, he might have had a remedy. In that case, goods were ordered from the plaintiff by a traveler of Morrison without an agreement on how it will be delivered. The plaintiff delivered through the defendants and the goods were lost due to the defendants’ negligence. The action was held in favour of the plaintiff against the defendant.

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Conclusively, the act of acceptance has been held not to be a passive one, but one where a clear act of communication has to show one’s agreement to the terms of an offer.