Court of Common Pleas
Citation
(1862) 11Cb (NS)869, EWHC CP J35;142 ER 1037
Apellant
Bindley
Respondent
Paul Felthhouse
Decided on
8th July 1862
Judge(s)
Willes J, Byles J and Keating J
Background
Paul Felthouse negotiated to buy a particular horse from his nephew and stated that ‘if I hear no more about him, I consider the horse mine at £30 15s’. His nephew did not reply but instructed the auctioneer, Bindley, not to sell the horse. Bindley mistakenly sold the horse. Felthouse sued the auctioneer for conversion.
To succeed in an action for conversion Felthouse needed to denote that the property (horse) was under his possession at the time of the sale, also to do this he needed to prove before the court that there was a contract between himself and his nephew for the sale of the horse.
There was no communication of acceptance before the sale; consequently, the nephew was not bound to sell the horse to Felthouse on the day of the auction. This was a landmark case in Contract law which states that one cannot impose an obligation on another to reject one’s offer or “silence cannot amount to acceptance”. This case was later reconsidered because the facts showed that the acceptance was communicated by the conduct.
Facts
A London builder, Paul Felthouse sued Mr. Bindley. He wanted to buy a horse from his nephew name John Felthouse. Uncle offered to buy a horse from nephew but there was a mix-up between with the price, as uncle offered less than nephew desired, after this uncle by stating in his written statement that “if I hear no more about him, I consider the horse mine at £30 15s.” The nephew, John did not reply to him and was busy at his farm in Tamworth however he asked his auctioneer, William Bindley to reserve the horse i.e. not to sell the horse. But by omission, the horse was sold by the auctioneer and fetched more money than the uncle offered. Auctioneer soon realized his mistake and hence wrote to the uncle apologizing for the omission committed. He also stated in his writing that “Instructions were given me to reserve the horse” but all was done accidentally. Later nephew also wrote to his uncle stating that he was annoyed by the negligence shown by the auctioneer as he already told him that the horse was sold. He further also stated that he will try to recover the horse from the buyer. When uncle Felthouse realized that the horse had sold, he sued the auctioneer, Bindley in torts of conversion which means using someone else’s property inconsistently with their right, with it necessary to show that the horse was his property, in order to prove that there was a valid contract. Mr. Bindley argued there was no valid contract for the horse since the nephew had not communicated his acceptance of the complainant’s offer.
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Issue
- This case calls into question whether or not a valid contract existed between Plaintiff, Paul Felthouse, and defendant William Bindley, as he was sued under the tort of conversion so for that plaintiff needs to prove his possession over the horse. Additionally, this case raises the question of whether silence or a failure to reject an offer amount to acceptance.
Arguments
Plaintiff’s Contention
The plaintiff argued that the contract was valid. Since the nephew had the intention to sell the horse and he didn’t reply to his uncle’s letter, which ultimately means he would accept the offer(as mentioned in the letter). There was an implied acceptance from Nephew’s side. Later, Felthuse contended that under the contract the horse had become his property. Thus, Bindley was liable for the conversion of the same in his name.
Defendant’s Contention
Defendant argued that there was no existing contract as John Felthouse didn’t communicate his acceptance to his uncle Paul Felthouse. So, the horse didn’t belong to Plaintiff, Paul Felthouse, so he can’t sue against him under Tort of Conversion.
Observation
It was observed that there was no contract between the uncle and his nephew for the horse. Because two things are required for the contract first is acceptance need to e communicated to the offerer and secondly, the offeror cannot put the burden of refusal on the offeree. Silence didn’t amount to acceptance, thus there is no acceptance of the offer. The acceptance of an offer should be communicated clearly. Even though the nephew has the intention to sell his horse, he failed to communicate the acceptance to his uncle.
Judgment
It was held in this case that there was no contract for the horse between the Felthouse and his nephew. There had not been an acceptance of the offer; silence did not amount to acceptance and an obligation cannot be imposed by another. Any acceptance of an offer must be communicated clearly. Although the nephew had intended to sell the horse to the complainant and showed this interest, there was no contract of sale. Thus, the nephew’s failure to respond to the complainant did not amount to an acceptance of his offer.
Willes J delivered the lead judgment, he stated: “I am of opinion that the rule to enter a nonsuit should be made absolute. The horse in question had belonged to the plaintiff’s nephew, John Felthouse. In December 1860, a conversation took place between the plaintiff and his nephew relative to the purchase of the horse by the former. The uncle seems to have thought that he had on that occasion bought the horse for £30, the nephew said that he had sold it for 30 guineas, but there was clearly no complete bargain at that time.” On the 1st of January, 1861, the nephew writes.
It is clear, therefore, that the nephew in his own mind intended his uncle to have the horse at the price which he (the uncle) had named, £30 and 15s, but he had not communicated such his intention to his uncle, or done anything to bind himself. It appears to me that, independently of the subsequent letters, there had been no bargain to pass the property i.e., horse to the plaintiff, and therefore that he had no right to complain of the sale. Then, what is the effect of the subsequent correspondence? The letter of the auctioneer amounts to nothing. The subsequent correspondence has no legal effect
Justice Byles and Justice Keating both agreed with Justice Willes. Justice Keating further illustrated that “as between the uncle and the auctioneer, the only question we have to consider is whether the horse was the property of the plaintiff at the time of the sale on the 25th of February. It seems to me that nothing had been done at that time to pass the property out of the nephew and vest it in the plaintiff. A proposal had been made, but there had before that day been no acceptance binding the nephew.”
Ratio Decendi
1. Silence is ambiguous and difficult to infer the intention to accept, there must be clear communication.
2. Acceptance must be communicated by the acceptor himself, so that we may know when a contract binds both parties. If acceptance is communicated by another person (third person) then no contract will be done, it must be acceptor or offered.
3. Prevents an offeror from exploiting an offeree’s inertia by making him contractually liable unless he takes the trouble to reject the offer expressly. cannot impose obligations on an unwilling party.
Analysis
The court felt that the nephew’s conduct in trying to keep the horse out of the sale did not necessarily imply that he intended to accept his uncle’s offer – even though the nephew actually wrote afterwards to apologise for the mistake – and so it was not clear that his silence in response to the offer was intended to constitute acceptance. This can be criticized in that it is hard to see how there could have been clearer evidence that the nephew did actually intend to sell, but, on the other hand, there are many situations in which it would be undesirable and confusing for silence to amount to acceptance. Thus in Felthouse, if the nephew had been the one to say that if his uncle heard nothing more he could treat the offer as accepted, there would have been a contract.
Conclusion
It was held by the Hon’ble Court that there was no contract for the horse between the complainant and his nephew. There had not been an acceptance of the offer; silence did not amount to acceptance and an obligation cannot be imposed by another. Any acceptance of an offer must be communicated clearly.
