Stevenson v McLean [1880] 5 QBD 346

The sale of goods involves the transfer of ownership of tangible items from a seller to a buyer for consideration, usually money. This process is governed by laws that outline rights, warranties, and risk transfer. 

An offer is a proposal to enter into a contract, and it remains valid for a specified or reasonable time. If the offeree rejects the offer, it is no longer valid. Refusal can be explicit (a clear "no") or implicit (lack of response within a set timeframe).

Revocation occurs when the offeror withdraws the offer before the offeree accepts it. It becomes effective once the offeree receives the revocation notice. If the offer is accepted before the revocation is communicated, a contract is formed, and the offeror must honor the terms.

McLean (D) ("Defendant"), who had iron warrants, wrote to Stevenson, Jaques, & Co (P) ("Plaintiffs") asking if they could get him an offer for the iron.

• After some correspondence, Defendant set a price of 40 shillings per ton, stating he would hold the offer open until Monday.

• On Monday at 9:42 a.m., the Plaintiffs sent a telegram asking if the 40 shillings offer could apply for delivery over two months, or what the longest acceptable delivery time would be.

• The Defendant did not respond and later sold the iron to someone else. At 1:25 p.m., he telegraphed the Plaintiffs to inform them of the sale.

• However, before receiving this telegram, the Plaintiffs sent a telegram at 1:34 p.m., stating they had a buyer for the iron at the agreed-upon price.

• The Defendant refused to deliver, citing his earlier sale.

The Plaintiffs then filed a lawsuit for non-delivery.

The jury found that the parties' relationship was that of buyer and seller, not principal and agent.

• The case took place during a time of market volatility, leading to uncertainty about price fluctuations on the day in question.

The court presided over by Lush, J., held that the Plaintiffs' 9:42 a.m. telegram on Monday should not have been construed as a rejection of the Defendant's offer, but rather as an inquiry about possible modifications to the terms.

• The court noted that although the Defendant had the right to revoke his offer before the end of Monday, such revocation would only be effective when it was received by the Plaintiffs.

Since the Defendant's revocation telegram, sent at 1:25 p.m., had not reached the Plaintiffs by the time they sent their acceptance at 1:34 p.m., the court concluded that the Defendant's offer was still open when the Plaintiffs accepted it.

• Given this finding, the court determined that a valid contract was formed, and thus the Plaintiffs' action for non-delivery of the iron was maintainable.

As a result, the court ruled in favor of the Plaintiffs.

This case highlights fundamental aspects of contract law, particularly those relating to the sale of goods and the dynamics of offer and acceptance.

• It shows that the sale of goods involves the transfer of ownership, subject to legal frameworks governing rights, warranties, and risk transfer.

• This understanding provides a foundation for evaluating contractual disputes in commercial transactions.

It emphasizes the significance of an offer in contract formation.

• An offer represents a clear intention to enter into a contractual agreement, which remains open for acc,eptance within a reasonable timeframe.

• Importantly, rejection of an offer terminates its validity, whether explicitly or implicitly.

The case also illuminates the principle of offer revocation.

• It clarifies that an offeror retains the right to withdraw their offer before acceptance, but such withdrawal must be effectively communicated to the offeree.

• In this instance, the court's ruling hinged on the timing of the offer's revocation and its receipt by the offeree.

The judgment highlights the importance of timing and effective communication in contract law. Despite the Defendant's attempt to revoke the offer, the court deemed it ineffective due to the timing of communication, thereby validating the subsequent acceptance by the plaintiffs.

This case shows the importance of legal principles in contractual relationships, ensuring fairness and accountability in commercial dealings.

Defendant offered to sell Plaintiff iron for a certain sum. Plaintiff asked Defendant if he “would accept [the sum Defendant proposed] for payment over two months or, if not, what was the longest limit you would give?”

Defendant then sold the iron to a 3rd party. Plaintiff, having heard nothing from Defendant and later wrote to him deciding to take up the original offer.

The court held that Defendant’s correspondence was a request for further information and NOT a counter offer, so that this case was distinct from Hyde v Wrench.

The offer was still valid and therefore Plaintiff was entitled to take it up.

• The distinction between query and conter-offer might be hard to sustain: supposing Plaintiff had written a letter saying “would you accept payment over 2 months?” This could be seen as either. In this case the phrase “if not” would suggest that Plaintiff is not necessarily asking Defendant to change his position, whereas in the example I give it could be construed that way- hard to determine…

The court said that the question should have been answered (doesn’t say whether legally or morally) and that Defendant still had to communicate a revocation to be free from the original offer. 

Hyde v Wrench