By Pratham Kaushik
The author is a first-year law student at SLS-N.
INTRODUCTION
Hyde v Wrench (1840) 49 ER 132 is one of the premier landmark cases in the English Contract Law which deals with the aspect of a Counter-Offer, Negotiation and Specific Performance of a Contract. The case was overseen by Lord Langdale.
ESSENTIALS OF THE CASE
- Appellant- Hyde
- Respondent- Wrench
- Judge- Lord Langdale
- Citation- 49 ER 132
- Date of judgement- 8th December 1840
- Keywords- offer, counter offer
FACTS OF THE CASE [1]
- The defendant, Wrench expressed his desire to sell his estate at a price of 1200 Euros to the plaintiff, Hyde.
- The offer to buy the defendant’s estate at 1200 Euros was ultimately declined by, Hyde, the plaintiff and got his refusal communicated through his agent thereafter.
- Mr. Wrench once again sent an intimation to Mr. Hyde expressing the wish to sell his estate at a final price of a thousand euros and this amount was not open to any sort of negotiation and the quoted price would not be reduced further. The same was communicated on the 6th of June, 1840.
- Mr. Hyde, in his counter-offer, sent a letter to the plaintiff on the 8th of June that he was ready to purchase the said estate at a price of 950 euros.
- Mr. Wrench took note of the offer and also took time to consider the counter-offer placed in front of him of selling the estate at the price of 950 euros. Mr. Wrench communicated his refusal to sell the estate at the newly quoted price to Mr. Hyde on the 27th of June.
- Mr. Hyde changed his mind once again and communicated to Mr. Wrench that now after all he was ready to buy the estate at a price of a thousand euros, the previous offer given by Mr. Wrench. The same was communicated on the 29th of June.
- Mr. Wrench refused the offer to sell his estate at a price of a thousand euros.
- As a result, the plaintiff sued the defendant on the grounds of a breach of contract committed by the defendant.
ISSUE RAISED IN THE CASE[2]
- The first issue from the takeaway would be that will the defendant be responsible to perform a specific contract even when the plaintiff presented a counter-offer in front of the defendant?
- The second issue raised would be that even if the previous offer got refused and there was no such formation of a legally binding agreement in the first place, does the refusal of the defendant to sell the land ultimately amounts to a breach of contract?
- Will the claim of the plaintiff succeed in demanding specific performance of the contract? Is there any legally binding agreement of any sort?
JUDGEMENT OF THE CASE
The court dismissed the claims of the plaintiff, Mr. Wrench, and asserted that there was no legally binding agreement between the plaintiff and the defendant. It was observed that the moment when Mr. Hyde presented Mr. Wrench with a counter-offer in front of him, the original terms and conditions of the offer are simply terminated and the offeree cannot go back to the previous terms and conditions of the contract. The offeror, in this case, is Mr. Wrench and the offeree is Mr. Hyde. Lord Langdale also stated that had the plaintiff accepted the offer of the defendant to purchase the estate at the price of a thousand pounds, it would have been a perfectly legally binding contract. He also stated the plaintiff was not competent to revive the original terms and conditions which if accepted, would have been made to a legally enforceable contract.
RULE (part of case analysis)
It is undisputed in the eyes of the law that to be legally binding and enforceable, an acceptance must be absolute and unqualified. In instances when there is a certain alteration in the original terms and conditions of the offer made, the original offer simply terminates. It is the discretion on the part of the offeree to accept or decline the offer made to him by the offeree. In any case, if the offeree rejects the original terms of the offer and alters it and forms new terms and conditions, that amounts to a counter-offer and there is no lawful way that the offeree can go back to the original offer and therefore, the offeror is not bound by the law to carry out the specific performance of the original offer.
In the case of Kennedy v Lee[3], it was held that when the essential terms and conditions of the offer are left to be decided or settled later, there is no legally binding agreement in that case.
Sir Jenkins CJ in his judgement of the case of Haji Mohd Haji Jiva v E Spinner [4]stated the following:
The stage of negotiation is deemed to be incomplete unless and until the acceptance so obtained is absolute and unqualified. If the condition is not fulfilled, a valid contract cannot come into existence.
CASE ANALYSIS (extension)
Offer is known as an action wherein a person expresses his willingness to do something or not do something to obtain the acceptance or consent of the other person.
Acceptance is known when the person to whom the proposal is made expresses his consent to enter into an agreement with the offeror. There should be free consent without any coercion, fraud, misrepresentation.
In the case of Hyde v Wrench, Lord Langdale’s exact words were as the follows-
“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 demurrer must be allowed”[5]
The lawyers of the plaintiff stated while citing cases like Johnson v King[6]that the offer of the defendant subsisted it was on the part of the plaintiff, being competent to accept the said offer. It was also exclaimed in the court of law by the plaintiff’s lawyers that the offer by the defendant was not taken back and hence there still existed the valid contract, that is, a legally enforceable agreement.
The basic assertion that was put in front after in the judgement of the case was that a counter-offer is the one in which the original terms and conditions are put into due alteration by the offeree and new terms and conditions are set and put in front of the offeror.
A counter-offer shall be deemed as legally un-enforceable until the communication of acceptance by the offeror is given.
In the case of Badrilal v. Municipal Corporation of Indore[7], it was stated that if the plaintiff finally expresses his willingness to agree to the original terms and conditions of the previous offer after the refusal of the defendant to the counter-offer presented by the plaintiff. There is no legally enforceable agreement and the offeror is not bound to perform as per the original terms and conditions later agreed by the offeree.
A breach of contract is committed when one of the parties does not abide by the pre-determined terms and conditions of a valid contract and therefore, compensation or specific performance can be obtained. However, in Hyde v Wrench, no valid contract existed in the first place therefore, a breach of contract was not committed on the part of the defendant.
CONCLUSION
This research paper analyses the case of Hyde v Wrench and explains the basic assertion and explanation that was put in the judgment by Lord Langdale. It is observed in the case that a counter-offer unless accepted does not make for a valid contract. This landmark judgement covers the arenas of offer, negotiation, counter-offer, and breach of contract. It has been duly observed through this research paper that the plaintiff cannot go back to the previous terms and conditions of the original offer after he puts up a counter-offer previously. A counter-offer simply will terminate the original offer and it is on the part of the offeror in this case if he would be willing to sell his estate at a price of 950 euros as offered by the offeree in his counter-offer. The case analysis part of this project has also covered a certain case which carries the legal ramifications of Hyde v Wrench which is Badrilal v Municipal Corporation of Indore and also covers cases that were before Hyde v Wrench like Johnson v King which were put in the argument by the lawyers of the plaintiff. Everything aside, the defendant’s refusal terminated the counter-offer, leaving no chance to form a valid contract.
[1]. All Answers ltd, ‘Hyde v Wrench – 1840’ (Lawteacher.net, December 2021) <https://www.lawteacher.net/cases/hyde-v-wrench.php?vref=1> accessed 22 November 2021
[2] Hyde v Wrench, (Judicate Me) <https://judicateme.com/wp-content/uploads/2020/06/Hyde-v.-wrench.pdf> , last accessed 19 November 2021
[3] Kennedy v Lee, 36 E.R. 170
[4] Haji Mohd Haji Jiva v E Spinner, (1900) 24 Bom 510
[5] Hyde v Wrench (1840) 49 ER 132
[6] Johnson v King (1824) 2 Bing 270
[7] Badrilal v Municipal Corporation of Indore, 1973 AIR 508
