Hyde v Wrench (1840): Case Brief
Case name & citation: Hyde v Wrench [(1840) 3 Beav 334, 49 ER 132]
Year of the case: 1840
Jurisdiction: Rolls Court
Area of law: Communication of offer; acceptance
The case deals with…
The case of Hyde v Wrench is one of the most famous cases on counter-offers.
Facts of the case (Hyde v Wrench)
Mr. Wrench was the defendant and Mr. Hyde was the plaintiff in the case.
On June 6, the defendant had offered to sell his farm for £1,000, and the plaintiff countered with an offer to buy it for £950. On June 27, the defendant turned down the plaintiff’s offer of £950, and on June 29, the plaintiff agreed in writing to pay £1000. However, the defendant neither made any response nor indicated any agreement to the offer to pay £1,000 by the plaintiff. He refused to sell his farm.
The plaintiff filed a claim for specific performance, alleging that Mr. Wrench had breached the terms of the contract by refusing to sell the farm.
Issue that arose in ‘Hyde v Wrench’
In this case, the question that arose was whether the parties had a legally binding contract and, in the event that a counteroffer was made during negotiations, whether the original offer would still be available.
The Rule relating to Counter proposals
Sometimes, an offeree may reply by making a new proposal in response to the original offer, which is known as a counter-offer. It could just be that the offeree modifies the terms because he or she doesn’t agree with one or more of them. This is referred to be a counter-offer and it is not an acceptance of the original offer because it does not entail agreement to all of its terms. In fact, it is a new offer that may be accepted or rejected in some other way. The effect of a counteroffer is the termination of the initial offer.
Thus, a counter-offer implies that the stage of negotiation has not yet passed. And a contract will be made if the new offer is accepted by the original promisor.
An example of a counter-offer would be if Jack offered to sell Jill a bicycle for £70 and Jill responded, “I’ll give you £68 for it.” In this scenario, even though Jack and Jill may be very near to an agreement, there would be no contract. Furthermore, if Jack refused to accept £68, Jill would be unable to demand that she be permitted to purchase the bicycle for the original price of £70 because her counter-offer cancelled Jack’s initial offer. A similar kind of bargaining situation is what arose over buying a farm in the given case of Hyde v Wrench.
Judgment of the Court in ‘Hyde v Wrench’
The Court held that there was no binding contract for the purchase of the farm.
It was stated that the original offer is superseded and cancelled when a counter-offer is made. It is no longer possible to accept or move forward with the original offer. In this case, Mr. Hyde revoked the initial offer proposed by Mr. Wrench. Mr. Wrench offered to sell a farm for £1,000 and Mr. Hyde made a £950 counter-offer instead, and thus, could not track back.
The counter-offer put an end to the offer previously made by the defendant, thus there was no contract.
In the words of LORD LANGDALE MR, it was stated as follows:
“I think there exists no valid binding contract between the parties for the purchase of the property. The defendant offered to sell it for £1,000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract; instead of that, the plaintiff made an offer of his own to purchase the property for £950, and he thereby rejected the offer previously made by the defendant. I think that it was not afterwards competent for him to revive the proposal of the defendant, by tendering an acceptance of it; and that, therefore, there exists no obligation of any sort between the parties. . .”
The legal point emerging from the case
The making of a counter-offer by the offeree is considered a rejection of the original offer.
Counter-offers should not be confused with cross-offers.
Cross-offers are made between two parties who are unaware of one another’s offer and who make similar proposals to one another. Such offers do not signify the other party’s acceptance of one’s offer, and as a result, there is no formal agreement. Tinn v Hoffman & Co. (1873) is a leading case on this.
List of references used:
You might also like: