Hyde v Wrench [1840] EWHC Ch J90 (08 December 1840)

An owner offered to sell a farm for £1,000. The claimant offered £950, which was rejected. The claimant then tried to accept the original £1,000 offer. The court held that the counter-offer had terminated the original offer, so no contract existed.

Facts

The case concerned a negotiation for the sale of a farm. The defendant, Mr Wrench, offered to sell his farm to the claimant, Mr Hyde, for £1,000. This offer was made on 6th June. In response, on 8th June, the claimant made a counter-offer to purchase the farm for £950. The defendant took time to consider this counter-offer and, on 27th June, wrote to the claimant’s agent explicitly rejecting it. Following this rejection, on 29th June, the claimant wrote to the defendant stating that he was now prepared to accept the original offer of £1,000. The defendant refused to sell the farm, and the claimant sued for specific performance, arguing that a binding contract had been formed.

Issues

The primary legal issue before the court was whether a binding contract for the sale of the farm existed between the claimant and the defendant. This depended on determining whether the defendant’s original offer to sell for £1,000 was still open for acceptance after the claimant had made his counter-offer of £950.

Judgment

The Master of the Rolls, Lord Langdale, held that there was no valid binding contract between the parties. The claimant’s claim for specific performance was therefore dismissed. The judgment established a crucial principle in the law of contract regarding counter-offers.

Reasoning of the Court

Lord Langdale’s reasoning was that the claimant’s counter-offer of £950 amounted to a rejection of the defendant’s original offer. By making a new offer, the claimant had effectively terminated the defendant’s offer, and it could therefore no longer be accepted. The court found that an offer, once rejected, ceases to exist and cannot be revived by a subsequent acceptance from the original offeree. In his judgment, Lord Langdale stated:

Under the circumstances stated in this bill, I think there exists no valid binding contract between the parties for the purchase of the property. The Defendant offered to sell it for £1000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract; instead of that, the Plaintiff made an offer of his own, to purchase the property for £950., and he thereby rejected the offer previously made by the Defendant. I think that it was not afterwards competent for him to revive the proposal of the Defendant, by tendering an acceptance of it; and that, therefore, there exists no obligation of any sort between the parties…

The court’s logic was that to form a contract, there must be a ‘meeting of the minds’ (consensus ad idem) through an unqualified acceptance that exactly mirrors the terms of the offer. The counter-offer introduced a new term (£950 instead of £1,000), which broke the mirror image and functioned as a formal rejection.

Implications

The decision in Hyde v Wrench is a foundational authority in English contract law, establishing the ‘counter-offer rule’. It clarifies that a counter-offer automatically terminates the original offer, creating certainty in negotiations. An offeror is free from their original offer as soon as a counter-offer is received and does not need to formally withdraw it. This principle supports the ‘mirror image rule’, which dictates that an acceptance must be an absolute and unqualified assent to all terms of the offer. Any variation constitutes a counter-offer, which the original offeror is then free to accept or reject. This case remains a cornerstone taught in introductory contract law to illustrate the dynamics of offer and acceptance.

Verdict: The claimant’s bill for specific performance was dismissed with costs.

Source: Hyde v Wrench [1840] EWHC Ch J90 (08 December 1840)