Case name & citation: Livingstone v Evans  4 D.L.R. 769 (Alta. S.C.)
Year of the case: 1925
Jurisdiction: Supreme Court of Alberta
Learned judge: Walsh, J.
Area of law: Counteroffer; acceptance
What is the case about?
The case of Livingstone v Evans is a good illustration of how a counteroffer puts an end to the original offer and whether the original offer can be renewed subsequently.
Facts of the case (Livingstone v Evans)
In this case, the following conversations took place between the concerned parties through telegram.
1. T.J. Evans (the defendant) wrote to Livingstone (the plaintiff) proposing to sell a piece of land for $1,800.
2. The plaintiff wired in return “Send lowest cash price. Will give $1,600 cash. Wire.”
3. The defendant responded with “Cannot reduce the price.”
4. The plaintiff then wrote to accept the original offer of $1,800.
But the defendant no longer wanted to sell to the plaintiff and thus, the plaintiff sued for specific performance.
Was the first telegram by the plaintiff a counteroffer?
If so, did that counteroffer constitute a rejection of the original offer made by Evans?
Did this make Evans free from contractual liability?
Judgment of the Court in “Livingstone v Evans”
The Court decided in favor of the plaintiff.
The interpretation was made as follows:
Under the long-standing precedent established in the case of Hyde v. Wrench, a counteroffer constitutes a rejection of the original offer. This means that when the plaintiff made the counteroffer to purchase the land for $1,600, it rejected the original offer made by the defendant to sell the land for $1,800. It put an end to the original offer and to the defendant’s liability to sell.
However, it should be noted that the defendant’s response of “Cannot reduce the price” could be seen as a reaffirmation of the original offer to sell the land for $1,800. If this is the case, then the plaintiff’s subsequent acceptance of the original offer could be seen as forming a valid contract.
Thus, the original offer was not said to be negated in this case.
That is to say, the Court found that the second telegram by Evans, stating “Cannot reduce the price,” constituted a renewal of the original offer, and Livingstone’s acceptance of this renewed offer made it a binding contract between the two parties.
Hence, it was decided that Evans was bound to fulfill the contract. The Court thus granted an order of specific performance.
Governing principles behind the case
If an acceptance, in any respect, varies the terms of an offer, it will be treated as a counteroffer and will constitute a rejection of the original offer.
However, an offer can be renewed after a counteroffer if subsequently the original promisor uses ambiguous language that could be interpreted as a reaffirmation of the original offer. In such cases, it will be up to the Court to determine whether the offer was truly renewed or whether it was effectively rejected by the counteroffer.
It is important to note that the determination of whether an offer has been renewed or rejected will depend on the specific circumstances of each case and will be made on a case-by-case basis.
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