Mr Harvey, the appellant, was running a company in Jamaica and he wanted to purchase Mr Facey’s property known as the “Bumper Hall Pen”. At the same time, Mr Facey was also in a negotiation with the Mayor and Council of King of Kingston City for the said property.
On 6th October 1893, Mr Harvey sent a Telegram to Mr Facey regarding the purchase of the property. The Telegram read:
“Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid”. [Telegram 1]
After reading the telegram Mr Facey replied, “Lowest Price for “Bumper Hall Pen £900” [Telegram 2]
The next day, the appellant replied “We agree to buy Bumper Hall Pen for the sum of £900 asked by you. Please send us your title deed in order that we may get early possession.” [Telegram 3]
Mr Facey received the telegram and chose not to respond to it. Later, he refused to sell the property to the appellant.
Displeased Mr Harvey decided to sue Mr Facey claiming that his response [telegram 3] was an acceptance to Mr Facey’s offer in Telegram 2. Hence, He is bound by a contract.
The petition was initially dismissed on the first trial by Lord Curren on the ground that the alleged agreement does not resemble a concluded contract.
Disheartened by this, Mr Harvey went to the Appellate Court where the existence of the contract was proved and with the leave of the Appellate Court, he appealed to the Privy Council.
- Whether there was an explicit offer from Facey to Harvey to purchase the Bumper Hall Pen for £900?
- Whether there exists a valid contract?
The Hon’ble Bech reviewed the entire matter and decided to uphold the verdict of Justice Curren. It was held that in the first telegram, the appellant asked two questions, one was whether the respondent is willing to sell the property to him and the second was the minimum price for the said property.
But, the respondent only replied to the second part of the question, quoting the price for the property to be 900 Pounds. But his willingness to sell the property to Mr Harvey was absent in the answer. Hence, it cannot be assumed that the reply by the respondent [Telegraph 2] constitutes a proper offer.
Hence, the ‘acceptance’ given by the respondent in Telegraph 3 is inconsequential because there was no offer.
This is a landmark case the laid the foundation for the concept of ‘invitation to offer. It can be explained as a situation where the price of the ‘product for sale’ is mentioned but the owner has not expressed the intent to sell it, thereby it does not constitute an offer.
Thus, it is a mere invitation for people to make an offer. Upon making such an offer, the discretion to accept it or reject it lies with the party making the invitation.
RELEVANCE OF HARVEY AND FACEY IN INDIAN LAW
The rule of offer, acceptance, and invitation to offer has also been adopted in the Indian Contract Law.
The Indian Contract Act, 1872
- Section 2(a) – “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.” Hence, a proposal is synonymous to offer.
- Section 2(b) – “When the person to whom the proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus, the proposal when accepted becomes a promise.”
- Section 5: – An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
- An Invitation to treat (offer) – An invitation to treat is a concept in contract law. It refers to an invitation for a party to make an offer enter into contractual negotiations.
Invitation to treat is derived from the Latin phrase, ‘invitatio ad offerendum’, meaning “inviting an offer”. The phrase can be best described as ‘an expression of willingness to negotiate. In contract law, this concept plays a crucial role, it separates an offer from a mere invitation of it, thereby, reducing miscommunication and accidental contracts. Some common examples of ‘Invitation to treat’ can be, price of items listed at a grocery store or an invitation to attend an auction.