§ 3. II proposal which has not been accepted does not affect the Till accept-

rights of the parties. ' ^^J-^^,

If a qualified acceptance does not make a proposal binding

it would seem to follow naturally that a proposal which was

not accepted at all will not bind either the proposer or the

person to whom his offer is addressed. In the case of con-

tracts which are made by the acts of the parties, and not by

proposal and acceptance in words, it would appear that

silence must ^ive consent, but then it must be silence coupled see dkta of

, Lord Selborne,

with some overt acquiescence. cL mI/^^*

The two following cases will serve to illustrate the rule.

A offered by letter to buy X's horse for X30 15*., adding * if Feithouse v.

, . , , Bindley, zi

I hear no more about him I consider the horse is mine at ^- ^- ^•^- *^-

£30 15^.' No answer was returned to the letter and it was

held that there was no contract. A person making a pro- see post. p. 33-

posal may, as it will appear, prescribe a form of acceptance,

but he may not turn the absence of communication into an

acceptance, and compel the recipient of his offer to refuse it

at peril of being construed to have accepted it.

l6 FOBMATION OF CONTBACT. Part II.

A very similar case, in which the offer was acted and not

25 L. J. Ex, written, was the case of Taylor v. Laird. There the plaintiff^

unasked, helped to work the defendant's vessel home. When

he came home he claimed reward for his services. But it

was held that since the defendant had never had the option

of rejecting the services while they were being rendered, and

did in fact repudiate them when he became aware of them,

he was not liable for their value. The plaintiff had in fact

made an offer which, uncommunicated and unaccepted, could

give him no rights against the party to whom it was ad-

dressed.

The cases just quoted show that a man cannot by any

form of offer bind the person to whom it is made before he

Except in has expressed his assent. It is almost equally true to say

an offer ^^^ ^^ proposal until it is accepted does not bind himself,

under seal. ][J^^ ^j^jg jg^^ proposition must be taken subject to some reser-

vations in the case of promises made under seal.

J?oM V K^'ht There is no doubt that a grant under seal may be binding

5 B. & c. 671. Qjj ^Ylq grantor and those who claim under him, though it has

never been communicated to the grantee, if it has been duly

delivered to a third party. And it would seem that a deed

purporting to create an outstanding obligation would stand

on the same footing. 'If A make an obligation to B and

deliver it to (7, this is the deed of A presently. But if C

Butler and offcrs it to B, thcu B may refuse it in pais, and thereby the

Balcer s Cssc, ^^

Coke, Rep. iii obligation will lose its force.* The position of the parties,

where the obligation is not communicated to the party in

whose favour it is made, is a somewhat curious one. Agree-

ment there can be none, for there is no mutual assent, and it

is open to the one to refuse the obligation which the other

would create in his favour. It would seem that he who has

made and delivered the deed is in the position of a man who

has made an offer of a promise which he may not revoke, bat

which is not a contract till it is assented to by the promisee.

uR.aH. u The point was much discussed in Xenos v, WickJiam, in

Chap. 1. §§ 3, 4- PBOPOSAL AND ACCEPTANCE. l^

whicli a policy of marine insurance ' signed, sealed and de-

liyered' by the defendants, the insurers, was never accepted

bj the plainti£^ the insured, but remained in the defendant's

office. It was held in the House of Lords that the assent

of the person insured at the time of delivery was not neces-

sary to entitle him, when he became aware of the loss of

his ship, to the benefit of the policy. * The efficacy of a deed

depends on its being sealed and delivered by the maker of

it; not on his ceasing to retain possession of it.^

§4.-4 proposal may he revoked before acceptance biU not Revoca-

afier ; an acceptance is irrevocable, proposal.

This rule follows from what has gone before. A proposal

creates no legal rights ; an acceptance of a proposal makes

a binding contract^ unless there be wanting some of the

elements already mentioned as necessary to the Formation

of Contract. As a proposal creates no legal rights, it is

obvious that it may be withdrawn before aoceptance; but

as respects the communication of the withdrawal or revoca-

tion to the party to whom the offer is made, a distinction

exists which needs to be noted, and which may be stated

thus : —

(a) Where the parties are in immediate communication

a proposal may be revoked without notice to the

person to whom it has been made^

(6) "Where the parties communicate by correspondence,

notice of revocation, in order to be valid, must reach

the person to whom the proposal is made before he

has accepted,

(a) Two cases will illustrate the rule that when the parties Where par-

are in immediate communication no notice of revocation is mediate"

' Mr. Pollock, in his work on Contract, p. lo, lays it down that

'a proposal is revoked only when the intention to revoke it is com-

municated to the other party.' We venture however to ,think that

this mle mnst be received with the limitations suggested by the

teases dted in the text.

1 8 FORMATION OF CONTRACT. Part 1 1.

communi- necessary. The first is the well-known case of Cook v, Oxley.

notice' The case was decided on the pleadings. Oxley offered to

needed. g^jj goods to Cook, and promised to keep his offer open till

4 o'clock in the afternoon. Cook signified his acceptance

before 4 o'clock, and when Oxley failed to deliver the goods

brought an action against him. But it was held that if he

sued on a promise to keep the offer open till 4 o'clock he

must fail, because there was no consideration for the pro-

mise ; and that if he relied on his acceptance as constituting

a binding contract he must fail, because he did not state

in his declaration that Oxley had not sold the goods, and

so substantially revoked his offer, before the time of accept-

ance. The Court thus clearly contemplated a revocation of

the offer of the defendant as possible at any time before

acceptance, and did not regard notice to the plaintiff as

Cook V. Oxley, esscntial to the validity of the revocation.

T. R. 653. ....

L. R. 2 ch. D. Similar in point is Dickinson v. Dodds, which was an at-

tempt to obtain specific performance of a contract under the

following circumstances. The defendant on June loth, 1874,

gave the plaintiff a memorandum in writing as follows : — * I

hereby undertake to sell to Mr. George Dickinson the whole

of the dwelling-houses, garden ground, stabling, and out-

buildings thereto belonging, situate at Croft, belonging to

me, for the sum of £800. As witness my 'hand this loth

day of June, 1874.

£800. (Signed) John Dodds.'

' P.S. This offer to be left over until Friday, 9 o'clock, a.m.

J. D. (the twelfth) 12th June, 1874. (Signed) J. Dodds.*

On the I ith of June he sold the property to another person

without notice to the plaintiff. The plaintiff gave notice before

the stipulated time, but after the sale, that he accepted the

offer to sell, and sued for specific performance of what he alleged

to be a binding contract. But the Court of Appeal, reversing

the judgment of Bacon, Y. C, held that no contract had been

concluded. James, L. J., deals thus with the promise to keep

Chap. I. §4. PB0P08AL AND ACCEPTANCE. 1 9

tlie offer open, and with the fact that no notice had been

given of its revocation : — * It is clear settled law, on one of

the clearest principles of law, that this promise being a mere

nndum pactum was not binding, and that at any moment

before a complete acceptance by Dickinson of the offer,

Dodds was as free as Dickinson himself. Well,^ that being

the state of things, it is said that the only mode in which

Dodds conld assert that freedom was by actually and dis-

tinctly saying to Dickinson, "Now I withdraw my offer."

I apprehend that there is neither principle nor authority for

the proposition that there must be an express and actual

withdrawal of the offer, or what is called a retractation. It

must, to constitute a contract, appear that the two minds

were at one at the same moment of time, that is, that there

was an offer continuing up to the moment of acceptance. If

there was not such a continuing offer, then the acceptance

comes to nothing.'

(6) Where the parties are at a distance from one another Where par-

and communicate their intention! by correspondence a dif- municate

ferent rule prevails. Unless the acceptor has received ^^^^ ^ ^^^^'

^ , • . . tance,

notice of revocation before his acceptance, the revocation notice must

18 inoperative. This is perhaps a broader statement of the ceptor

rule than actual decisions in English Courts may justify ; before ac-

but it is a fair inference from the language of the Court

in the leading case upon the subject, and is supported by an

American case which is directly in point. Two illustrations

will show in what respect l^e rule as laid down exceeds

the limits of the English cases : —

On the ist of January A writes to X offering to sell

goods : on the 3rd he writes to revoke his offer, but X has

already written on the 2nd a letter of acceptance which A

receives on the 4th. Here there is no doubt that A would

be bound by the acceptance.

On the ist of January A writes to X offering to sell

goods : on the 2nd he writes to revoke his offer, but> before

c 2

ao FOBMATION OF CONTRACT. Part II.

his letter reaches X, X has written to accept Here the

intentions of the parties are not ad idem at the moment

Adams^v.^ B ^^ acccptancc, but it is nevertheless probable that * A would

* *^'**' * be regarded in law as making, during every instant of the

time his letter was travelling, the same identical offer ' to X,

and that he would be bound by the acceptance though made

Jhan?s Fir^^'^" ^^ ^® ^^ chaugcd his mind. There is no doubt that by

J HowJS.^?;)'. the rules of American law such an acceptance would be

binding,

irrevoca- The reasons for this rule are obvious. It is necessary,

ceptance. where parties are contracting at a distance, to fix some

moment of time when the contract should be complete,

for otherwise a man who accepted an offer made to him

and acted upon it immediately might be exposed to serious

loss if the proposer could revoke his offer at any moment

before the actual receipt of the acceptance. Nor, on the

other hand, would it conduce to the conduct of business

if the acceptor was forced to postpone acting upon the con-

tract until. he heard that his letter had reached the proposer.

It is necessary therefore to fix a mom^it for the conclusion

of the contract ; this moment is ihe moment when he to

whom the offer is made signifies his acceptance ; and the

acceptance is signified when the acceptor has done all that

he can to communicate his intention. In other words, the

moment of acceptance is the moment of despatch. An

acceptance once despatched is irrevocable, for the contract is

then made.

iB. &Aid. The leading case on this subject is Adams v. Lindsell.

In that case the defendant offered to sell wool to the plaintiff

by letter dated Sept. 2nd, 18*17. The letter was misdirected,

and so did not reach the plaintiff till Sept. 5th : he accepted

by letter posted that evening, but the defendant had in the

meantime sold the wool to others. The plaintiff sued for

non-delivery of the wool, and it was argued on behalf of the

defendant that no contract could arise until the plaintiff's

681

Chap. I. §4. PROPOSAL AND ACCEPTANCE. 21

answer reached, him. But tlie Court said * that if that were

so no contract could ever he completed hy the post. For

if the defendants were not hound hy their offer, when ac-

cepted hy the plaintiffs, till the answer was received, then

the plaintiff ought not to he hound till after they had

received the notification that the defendants had received

their answer and assented to it. And so it might go on

ad infmitum. The defendants must he considered in law as

making, during every instcmt of the time their letter was

travelling, the same identical offer to the plaintiffs; and

then the contra^ct is concluded hy the acceptance of it hy

(he latter:

The law as laid down in this case has heen followed in

several others down to the present time. But the rights

of the parties, where the letter of acceptance is lost or

unreasonahly delayed, are not altogether satisfactorily settled.

In Durdop v: Higgins Lord Cottenham appears to have i h. l. c. jsi.

held, though the point was not necessary to the decision of

the case, that the posting of an acceptance absolutely con-

cluded the contract, whatever might afterwards become of

the letter. This view was discussed and some limitations

to it suggested by the Court of Exchequer in the British l. r. 6 ex.

and American Telegraph Company v, Colson, But the law

on the subject perhaps finds its best expression in the

judgment of Mellish, L. J., in Harris* Case, in which he L.R.7Ch.587•

say8 that 'although the contract is complete at the time

when the letter accepting the offer is posted, yet it may be

subject to a condition subsequent, that if the letter does not

arrive in due course of post, then the parties may act on the

assumption that the offer has not been accepted.'

The framers of the Indian Contract Act do not appear

to have thought it necessary that the moment of acceptance

should be fixed as that at which the contract acquires an

irrevocably binding force. Section 4 of that Act provides

as follows : —

22

FORMATION OF CONTRACT.

Part II.

sec. 4, lays

down a

different

rule.

Indian Con- 'The communication of a proposal is complete when it

tract Act, comes to the knowledge of the person to whom it is made.

'The communication of an acceptance is complete as

against the proposer, when it is put in a course of trans-

mission to him, so as to be out of the power of the acceptor ;

as against the acceptor, when it comes to the knowledge

of the proposer.^

' The communication of a revocation is complete as against

the peraon who makes it, when it is put into a course of

transmission to the person to whom it is made, so as to

be out of the power of the person who makes it ; as against

the person to whom it is made, when it comes to his

knowledge/

It is perhaps sufficient to note tlie divergence from English

law without commenting on its propriety^ but it may be

worth while to consider whether, from a practical as well

as from a scientific point of view, it is desirable that in the

formation of a contract there should be a period in which

one party is bound while the other remains free.

Other

modes in

which pro-

posal may

lapse.

i^ R. I Exch.

109.