Stevenson, Jaques & Co v Mclean 25 May 1880 5 QBD 346, QBD

A seller offered iron for sale. The potential buyer replied with an inquiry about payment terms. The seller sold to a third party, but the original buyer then accepted the offer. The court held the inquiry was a request for information, not a counter-offer, so a binding contract existed.

Facts

The defendant, McLean, offered to sell warrants for iron to the plaintiffs, Stevenson, Jaques & Co., for ’40s. per ton, net cash,’ specifying the offer was open ’till Monday.’ On Monday morning, the plaintiffs sent a telegram to the defendant asking: ‘Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give.’ The defendant did not reply to this telegram and, at 1.25 pm, sold the iron to another party, sending a telegram to the plaintiffs to inform them of this revocation. However, before receiving the defendant’s revocation, the plaintiffs sent another telegram at 1.34 pm, accepting the defendant’s original offer. The plaintiffs received the revocation at 1.46 pm. The plaintiffs subsequently sued for damages for non-delivery of the iron, arguing a binding contract had been formed.

Issues

The primary legal issue was whether the plaintiffs’ initial telegram constituted a counter-offer, which would have had the effect of rejecting and terminating the defendant’s original offer, or if it was merely a request for information. A secondary issue was whether the defendant’s revocation of the offer was effective before it was communicated to the plaintiffs.

Judgment

Lush J, delivering the judgment of the Queen’s Bench Division, found in favour of the plaintiffs. He determined that the plaintiffs’ telegram was not a counter-offer but a mere inquiry to see if the defendant would be willing to modify the terms of the offer. The judge critically distinguished the wording of the telegram from a firm counter-proposal. He stated:

Here there is no counter-proposal. The words are, “Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give.” There is nothing specific by way of offer or rejection, but a mere inquiry, which should have been answered and not treated as a rejection of the offer.

Lush J contrasted this with the case of Hyde v Wrench, where a clear counter-offer had been made. Because the plaintiffs’ communication was only an inquiry, the defendant’s original offer remained open and capable of acceptance. Consequently, when the plaintiffs sent their subsequent telegram unconditionally accepting the offer, a binding contract was formed at that moment. The defendant’s attempt to revoke the offer was ineffective because the revocation was not communicated to the plaintiffs until after they had accepted. The court reasoned that an uncommunicated revocation is, for all practical purposes, no revocation at all. Therefore, the defendant was in breach of contract for failing to deliver the iron.

Implications

The decision in Stevenson, Jaques & Co v McLean is a significant authority in English contract law. It establishes the crucial distinction between a counter-offer, which terminates the original offer, and a mere request for further information, which does not. A request for information keeps the original offer alive, allowing the offeree to accept it later, provided it has not been validly revoked. The case clarifies that for a communication to be a counter-offer, it must introduce new terms as a new proposal, rather than simply explore the possibility of different terms. It also reinforces the principle that revocation of an offer is only effective upon being received by the offeree, not upon its dispatch.

Verdict: Judgment was given for the plaintiffs.

Source: Stevenson, Jaques & Co v Mclean 25 May 1880 5 QBD 346, QBD