Case name & citation: Powell v Lee (1908) 99 LT 284
Year of the case: 1908
Jurisdiction: King’s Bench Division, England and Wales
Area of law: Communication of acceptance in contract law
What is the case about?
This is an English contract law case that highlights the importance of communication of acceptance by the offeree himself. It says that acceptance should be communicated by someone who has the authority to accept. Information obtained from an unauthorized source is meaningless.
Facts of the case (Powell v Lee)
The plaintiff (Powell) was a candidate for the position of headmaster of a school. The managers appointed him by passing a resolution, but the decision was not conveyed to him. However, another applicant was notified that he had not been chosen. One of the members of the managing committee, without authority, informed the plaintiff of his appointment in his individual capacity. The managers later rescinded their decision and hired somebody else, and the plaintiff filed a suit for breach of contract.
1. Was there a completed & binding contract between the plaintiff and the school?
2. If there was one, could the school be held liable for a breach?
Judgement of the Court in “Powell v Lee”
It was held that the school was not liable for breach of contract.
The Court determined that no contract had been formed since the information from an unauthorized source is just as insufficient as overhearing from behind a closed door. According to the Court, “When six persons with the capacity to appoint someone for a post, vote on the matter and decide to designate someone, they do not establish a concluded contract immediately.” There needs to be something more to it. The group of persons must reach out (i.e., communicate their acceptance) to the selected candidate in some way.
Governing rule behind the case
It is quite obvious that a contract is created when an offer is accepted. With acceptance, the offeree expresses his willingness to be bound by the terms of the offer. As a result of this, legal relations are established between the offeror and the offeree. Now, for an acceptance of an offer to be effective, a number of requirements need to be met. One such requirement is related to its communication.
In order to be effective, an acceptance must be made by the offeree himself or by a person with the authority to accept. As a result, if acceptance is communicated by an unauthorized person, it will not result in legal relations.
In the given case, since Powell was not informed about his appointment by some authorized person, there wasn’t a valid communication of the acceptance on behalf of the managing committee and hence, no contract was formed.
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