Court: Privy Council (Jamaica)
Judgment Date: 29 July 1893
Where Reported: [1893] A.C. 552; [1893] 7 WLUK 139
Legal Issues in Harvey v Facey
In Harvey v Facey, the principal legal issue revolved around the formation of a contract through telegraphic communication and the determination of whether an offer and acceptance had occurred.
Harvey v Facey examined whether a response to a request for a lowest price constituted an offer that could be accepted, thus forming a binding contract.
The issue was centred on the interpretation of communication via telegram and its legal implications in contract formation, particularly focusing on the elements of offer, acceptance, and the intention to create legal relations​​.
Material Facts in Harvey v Facey
The appellants, Harvey and another party, initiated communication with the respondent, Facey, through a telegram asking, “Will you sell us B. H. P.?
Telegraph lowest cash price.” Facey replied with a telegram stating, “Lowest price for B. H. P. £900.” In response, the appellants sent another telegram stating, “We agree to buy B. H. P. for £900 asked by you. Please send us your title-deed in order that we may get early possession.”
However, Facey did not reply to this final telegram. The appellants then filed a suit for specific performance of the alleged contract, claiming that Facey’s telegram constituted an offer that they had accepted.
The Supreme Court of Jamaica initially dismissed the suit, but this decision was reversed by the Court of Appeal. The case was then appealed to the House of Lords​​.
Judgment in Harvey v Facey
The House of Lords held that no contract had been formed between the parties. The court reasoned that Facey’s telegram, which stated the lowest price for the property, was not an offer to sell but merely a response to a request for information.
Therefore, the appellants’ subsequent telegram, purporting to accept the ‘offer,’ was not an acceptance of an offer to sell, as no such offer had been made.
Instead, it was an offer to buy, which required express acceptance by Facey to form a binding contract.
Since Facey did not reply to this telegram, the court concluded that there was no acceptance and, consequently, no contract.
The judgment of the Supreme Court of Jamaica, which dismissed the suit for specific performance, was therefore restored​​.
The Reason for the Decision in Harvey v Facey
The decision of the House of Lords was grounded in fundamental principles of contract law, particularly the requirements for an offer and acceptance.
The court focused on the intention to create legal relations and the clarity of communication in contract formation.
The court interpreted Facey’s response as merely providing information requested by the appellants, not expressing an intention to be legally bound by a contract.
The court emphasised that an offer must be clear and unequivocal, and Facey’s response did not meet this standard.
The case underscored the distinction between an offer and an invitation to treat. An invitation to treat is an expression of willingness to negotiate, whereas an offer, if accepted, results in a binding contract.
Facey’s telegram was deemed to be an invitation to treat, not an offer. The appellants’ subsequent telegram was interpreted as an offer to purchase the property at the stated price, but for a contract to be formed, this offer needed to be explicitly accepted by Facey, which did not occur.
The court also highlighted the importance of communication clarity in contract formation, especially in negotiations conducted through telegrams.
The succinct nature of telegraphic communication requires clear expressions of offer and acceptance to form a contract.
The court’s interpretation avoided assumptions about implied intentions in communications, insisting on explicit expressions of acceptance in contractual agreements – see Whitely v Chappell (1868).
Additionally, the decision reflected judicial reluctance to infer a binding contract from vague or ambiguous communications.
The court’s approach was cautious, favouring a clear demonstration of mutual agreement and intention to enter into a contract before enforcing contractual obligations.
Legal Principles in Harvey v Facey
Harvey v Facey established key legal principles in contract law, particularly regarding offer, acceptance, and intention to create legal relations in the context of telegraphic communication.
The case clarified that a statement of price in response to an inquiry is not an offer but an invitation to treat.
For a binding contract to be formed, there must be a clear and unequivocal offer followed by an express acceptance.
Harvey v Facey also emphasised the necessity of clear communication in forming contracts, especially when conducted through means such as telegrams, where brevity can lead to ambiguity.
This judgment has been instrumental in shaping the understanding of what constitutes an offer and acceptance in contract negotiations, highlighting the need for explicitness and mutual intention in contractual agreements
