The report and the boxed commentary

HENTHORN v FRASER

On the top line is the page heading.

Below the page heading is the name of the case. The topic of case names is discussed more fully at pp. 83–84, but since this case involves an appeal, it is reasonable to assume that the appellant’s name comes first, followed by the respondent’s. One odd aspect of this particular case-name is that the respondent is given as Fraser (who, according to the report, was the secretary of the building society) rather than as being the building society itself. The report does not explain this, but since nothing turns on this detail we can safely ignore it.

1892 March 3, 26

These are the dates on which the court dealt with the case. The fact that two dates are given (March 3 and 26) suggest that the case was heard on the earlier date but the court did not give its judgment immediately, preferring to give careful consideration to the arguments which it had just heard. This is confirmed at the start of Lord Herschell’s judgment (towards the foot of p. 30 of the report) where the law reporter expressly identifies March 26 as the date of the judgment. The technical way of describing what is happening when this kind of delay occurs is to say that the court reserves judgment. Headnotes sometimes indicate that judgment was reserved by including the abbreviation cur adv vult. This represents the Latin phrase curia advisari vult, which translates literally as the court wishes to be advised, although, in reality, the court will be advising itself rather than seeking any outside assistance.

Lord Herschell, Lindley and Kay, LJJ

These are the names of the judges who decided the case. (The abbreviations of judicial titles are explained in Chapter 4.)

Contract by Letters – Acceptance of Offer by Post – Time of Acceptance – Withdrawal of Offer.

These are the catchwords (which are sometimes known as the keywords). They provide a very general idea of what the case is about. They seldom extend beyond three or four lines, and they always appear in italics.

The reporter’s summary of the case comes next and is the part of the headnote which you will find most useful. In this case, the headnote is fully narrative. (The three possible styles of headnote are explained at pp. 87–88.) This headnote is unusual because it contains two summaries of the facts, with the second being a little more detailed than the first. It is much more usual for the law reporter to decide which facts are worth including and then include them in a single summary.

H, who lived at Birkenhead, called at the office of a land society in Liverpool, to negotiate for the purchase of some houses belonging to them. The secretary signed and handed to him a note giving him the option of purchase for fourteen days at £750. On the next day the secretary posted to H a withdrawal of the offer. This withdrawal was posted between 12 and 1 o’clock, and did not reach Birken-head till after 5 p.m. In the meantime H had, at 3.50 p.m., posted to the secretary an unconditional acceptance of the offer, which was delivered in Liverpool after the society’s office had closed, and was opened by the secretary on the following morning:

Held, that where the circumstances under which an offer is made are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of it, the acceptance is complete as soon as it is posted.

Held, that in the present case, as the parties lived in different towns, an acceptance by post must have been within their contemplation, although the offer was not made by post.

Held, that a revocation of an offer is of no effect until brought to the mind of the person to whom the offer was made, and that therefore a revocation sent by post does not operate from the time of posting it.

Held, therefore (reversing the decision of the Vice-Chancellor of the County Palatine), that a binding contract was made on the posting of H’s acceptance, that the revocation of the offer was too late, and that H. was entitled to specific performance.

IN 1891 the Plaintiff was desirous of purchasing from the Huskisson Benefit Building Society certain houses in Flamank Street, Birkenhead. In May he, at the office of the society in Chapel Street, Liverpool, signed a memorandum drawn up by the secretary, offering £600 for the property, which offer was declined by the directors; and on the 1st of July he made in the same way an offer of £700, which was also declined. On the 7th of July he again called at the office, and the secretary verbally offered to sell to him for £750. This offer was reduced into writing, and was as follows:–

“I hereby give you the refusal of the Flamank Street property at £750 for fourteen days.”

The secretary, after signing this, handed it to the Plaintiff, who took it away with him for consideration.

On the morning of the 8th another person called at the office, and offered £760 for the property, which was accepted, and a contract for purchase signed, subject to a condition for avoiding it if the society found that they could not withdraw from the offer to the Plaintiff.

Between 12 and 1 o’clock on that day the secretary posted to the Plaintiff, who resided in Birkenhead, the following letter:

“Please take notice that my letter to you of the 7th instant, giving you the option of purchasing the property, Flamank Street, Birkenhead, for £750, in fourteen days, is withdrawn, and the offer cancelled.”

This letter, it appeared, was delivered at the Plaintiff’s address between 5 and 6 in the evening, but, as he was out, did not reach his hands till about 8 o’clock.

On the same 8th of July the Plaintiff’s solicitor, by the Plaintiff’s direction, wrote to the secretary as follows:-

“I am instructed by Mr. James Henthorn to write you, and accept your offer to sell the property, 1 to 17, Flamank Street, Birkenhead, at the price of £750. Kindly have contract prepared and forwarded to me.”

This letter was addressed to the society’s office, and was posted in Birkenhead at 3.50 p.m., was delivered at 8.30 p.m. after the closing of the office, and was received by the secretary on the following morning. The secretary replied, stating that the society’s offer had been withdrawn.

The procedural history of the case is given next, in very brief outline. The headnote of a more modern law report may well contain a more detailed procedural history, including, for example, dates of previous hearings. The procedural history is tedious and – in the vast majority of cases – of very little interest to anybody, least of all to students on academic courses.

The Plaintiff brought this action in the Court of the County Palatine for specific performance. The Vice-Chancellor dismissed the action, and the Plaintiff appealed.

Farwell, QC, and TR Hughes, for the appellant:

The names of the advocates, and summaries of their arguments, come next. Both sets of advocates refer to the same cases but they construct different legal arguments based on those authorities. (For the law reports which contain summaries of the advocates’ arguments, see p. 85.) As Lord Herschell demonstrates here, judges are perfectly willing to interrupt advocates.

We say that a binding contract was made when the Plaintiff’s letter of acceptance was posted: Dunlop v Higgins (1); Harris’s Case (2); Adams v Lindsell (3). We do not dispute that, though

(1) 1 HLC 381 (i.e. House of Lords Cases, before the introduction of the series cited as App Cas, which in turn became AC).

(2) LR 7 Ch 587 (i.e. reports of cases in the Court of Chancery, which is now the Chancery Division of the High Court, and which would now appear under the abbreviation Ch).

(3) 1 B & Al 681 (i.e. Barnewall & Alderson, the reporters who produced this series).

the option was given for fourteen days, it could be withdrawn within that time: Dickinson v Dodds (1); but if a binding contract is entered into, there cannot be a withdrawal. Where an acceptance is to be signified by doing some particular thing, as soon as that particular thing is done there is a contract: Brogden v Metropolitan Railway Company (2). Where it must be in the contemplation of the parties that an answer will be sent by post, the posting an acceptance makes a contract. In the case of Household Fire and Carriage Accident Insurance Company v Grant (3) it was considered that, according to the usages of mankind, an acceptance would be sent by post; and it was held that posting an acceptance made a contract, though the acceptance was never received. Here, as the parties lived in different towns, it was to be expected that the Plaintiff would post his answer. In Byrne v Van Tienhoven (4) a withdrawal was held too late which was not received till after the offer had been accepted, though it was posted before the acceptance; and so in Stevenson v McLean (5) it was held that a withdrawal of an offer was of no effect until it reached the other party.

Neville, QC, and PO Lawrence, for the Defendant:

We submit that the Vice-Chancellor has drawn a correct inference – that there was no authority to accept by post; and if that be so, the acceptance will not date from the posting. Dunlop v Higgins (6) went on the ground that it was the understanding of both parties that an answer should be sent by post. In Brogden v Metropolitan Railway Company, Lord Blackburn puts it on the ground “that where it is expressly or impliedly stated in the offer that you may accept the offer by posting a letter, the moment you post the letter the offer is accepted.” It would be very inconvenient to hold the post admissible in all cases.

(1) 2 ChD 463 (i.e. reports of the Chancery Division of the High Court, before the introduction of the current abbreviation Ch).

(2) 2 App Cas 666, 691 (i.e. reports of House of Lords’ decisions which would still appear in the Appeal Cases reports but the series would now be abbreviated to AC).

(3) 4 ExD 216 (i.e. reports of the old Exchequer Division of the High Court, which no longer exists).

(4) 5 CPD 344 (i.e. reports of the old Common Pleas Division of the High Court, which no longer exists).

(5) 5 QBD 346 (i.e. reports of the Queen’s Bench Division of the High Court before the introduction of the current abbreviation QB).

(6) 1 HLC 381 (see above).

by post; but the offer was delivered by hand to the Plaintiff, who was in the habit of calling at the Defendants’ office, and lived only at a short distance, so that authority to reply by post cannot be inferred. The post is not prohibited; the acceptance may be sent in any way; but, unless sending it by post was authorized, it is inoperative till it is received. Suppose, immediately after posting the acceptance, the Plaintiff had gone to the office and retracted it, surely he would have been free.

[LORD HERSCHELL: It is not clear that he would, after sending an acceptance in such a way that he could not prevent its reaching the other party. Possibly a case where the question is as to the date from which an acceptance which has been received is operative may not stand on precisely the same footing as one where the question is whether the person making the offer is bound, though the acceptance has never been received at all. More evidence of authority to accept by post may be required in the latter case than in the former.]

Dickinson v Dodds (1) shows that a binding contract to sell to another person may be made while an offer is pending, and that it will be a withdrawal of the offer.

[LORD HERSCHELL: In that case the person to whom the offer was made knew of the sale before he sent his acceptance.]

Farwell, in reply.

At this point we leave the headnote and move on to the judgment itself. Lord Herschell begins by identifying the facts of the case. However, they are not all material facts. For example, the legal issue in this case does not depend on the location of the property or the precise times at which things happened (although the times would have been material if they were such that the building society had been able to communicate its withdrawal of the offer – and had in fact done so – before Henthorn posted his acceptance). (Material facts are explained more fully at p. 107.)

1892. March 26. LORD HERSCHELL:

This is an action for the specific performance of a contract to sell to the Plaintiff certain house property situate in Flamank Street, Birkenhead. The action was tried before the Vice-Chancellor of the County Palatine of Lancashire, who gave judgment for the Defendants. On the 7th of July, 1891, the secretary of the building society whom the Defendants represent handed to the Plaintiff, in the office of the society at Liverpool, a letter in these terms:- “I hereby give you the refusal of the Flamank Street property at £750 for fourteen days.” It appears that the Plaintiff had been for some time in negotiation for the property,

(1) 2 ChD 463 (see above).

and had on two previous occasions made offers for the purchase of it, which were not accepted by the society. These offers were made by means of letters, written by the secretary in the office of the society, and signed by the Plaintiff there. The Plaintiff resided in Birkenhead, and he took away with him to that town the letter of the 7th of July containing the offer of the society. On the 8th of July a letter was posted in Birkenhead at 3.50 pm, written by his solicitor, accepting on his behalf the offer to sell the property at £750. This letter was not received at the Defendants’ office until 8.30 pm, after office hours, the office being closed at 6 o’clock. On the same day a letter was addressed to the Plaintiff by the secretary of the building society in these terms: “Please take notice that my letter to you of the 7th inst. giving you the option of purchasing the property, Flamank Street, Birkenhead, for £750, in fourteen days, is withdrawn and the offer cancelled.” This letter was posted in Liverpool between 12 and 1 pm, and was received in Birkenhead at 5.30 p.m. It will thus be seen that it was received before the Plaintiff’s letter of acceptance had reached Liverpool, but after it had been posted. One other fact only need be stated. On the 8th of July the secretary of the building society sold the same premises to Mr Miller for the sum of £760, but the receipt for the deposit paid in respect of the purchase stated that it was subject to being able to withdraw the letter to Mr. Henthorn giving him fourteen days’ option of purchase.

From Lord Herschell’s summary of the facts, we can identify the following as being material: (1) the seller offered to sell certain property to the buyer, for a fixed price within a specified time; (2) the buyer accepted the offer, at the set price and within the time limit, using the post to communicate his acceptance; (3) before receiving the buyer’s acceptance, the seller revoked the offer, once again using the post as the means of communication.

In the next part of his judgment, Lord Herschell turns to the legal issues in the case. The first issue concerns the revocation of the offer. By identifying a series of cases which establish that postal acceptance of an offer is effective as soon as it is posted, Lord Herschell explains why he thinks the same principle does not apply to postal revocations of offers.

If the acceptance by the Plaintiff of the Defendants’ offer is to be treated as complete at the time the letter containing it was posted, I can entertain no doubt that the society’s attempted revocation of the offer was wholly ineffectual. I think that a person who has made an offer must be considered as continuously making it until he has brought to the knowledge of the person to whom it was made that it is withdrawn. This seems to me to be in accordance with the reasoning of the Court of King’s Bench in the case of Adams v Lindsell (1), which was approved by the Lord Chancellor in Dunlop v Higgins (2), and also with the opinion of Mellish LJ in Harris’s Case (3). The

(1) 1 B & Al 681 (see above).

(2) 1 HLC 381, 399 (see above).

(3) LR 7 Ch 587 (see above).

very point was decided in the case of Byrne v Van Tienhoven (1) by Lindley LJ, and his decision was subsequently followed by Lush J.

The grounds upon which it has been held that the acceptance of an offer is complete when it is posted have, I think, no application to the revocation or modification of an offer. These can be no more effectual than the offer itself, unless brought to the mind of the person to whom the offer is made.

Lord Herschell then turns to the second legal issue he has to settle, namely whether acceptance of an offer is complete once it is posted. This is quickly resolved by reference to the binding precedent of Dunlop v Higgins. However, there remains a sub-issue of whether the postal rule applies to all cases or only in particular circumstances. His Lordship concludes that authorisation was implied here because the parties lived in different towns and the offer was to remain open for several days. In other words, from that point onwards, it was too late for the offer to be revoked.

But it is contended on behalf of the Defendants that the acceptance was complete only when received by them and not on the letter being posted. It cannot, of course, be denied, after the decision in Dunlop v Higgins (2) in the House of Lords, that, where an offer has been made through the medium of the post, the contract is complete as soon as the acceptance of the offer is posted, but that decision is said to be inapplicable here, inasmuch as the letter containing the offer was not sent by post to Birkenhead, but handed to the Plaintiff in the Defendants’ office at Liverpool. The question therefore arises in what circumstances the acceptance of an offer is to be regarded as complete as soon as it is posted. In the case of the Household Fire and Carriage Accident Insurance Company v Grant (3), Baggallay LJ said (4): “I think that the principle established in Dunlop v Higgins is limited in its application to cases in which by reason of general usage, or of the relations between the parties to any particular transactions, or of the terms in which the offer is made, the acceptance of such offer by a letter through the post is expressly or impliedly authorized.” And in the same case Thesiger LJ based his judgment (5) on the defendant having made an application for shares under circumstances “from which it must be implied that he authorized the company, in the event of their allotting to him the shares applied for, to send the notice of allotment by post.” The facts of that case were that the defendant had, in Swansea, where he resided, handed a letter of application to an agent of the company, their place of business being situate in London. It was from these circumstances that the Lords Justices implied an authority to the company to

(1) 5 CPD 344 (see above).

(2) 1 HLC 381 (see above).

(3) 4 ExD 216 (see above).

(4) Ibid 227.

(5) 4 ExD 218 (see above).

accept the defendant’s offer to take shares through the medium of the post. Applying the law thus laid down by the Court of Appeal, I think in the present case an authority to accept by post must be implied. Although the Plaintiff received the offer at the Defendants’ office in Liverpool, he resided in another town, and it must have been in contemplation that he would take the offer, which by its terms was to remain open for some days, with him to his place of residence, and those who made the offer must have known that it would be according to the ordinary usages of mankind that if he accepted it he should communicate his acceptance by means of the post.

At this point Lord Herschell could have disposed of the case but chooses instead to make some additional comments about implied authorisation as the basis for acceptance of an offer by post. Since these comments are not essential to the outcome of the case, they are obiter dicta. (Obiter dicta are explained more fully at pp. 106 and 111–113.)

I am not sure that I should myself have regarded the doctrine that an acceptance is complete as soon as the letter containing it is posted as resting upon an implied authority by the person making the offer to the person receiving it to accept by those means. It strikes me as somewhat artificial to speak of the person to whom the offer is made as having the implied authority of the other party to send his acceptance by post. He needs no authority to transmit the acceptance through any particular channel; he may select what means he pleases, the Post Office no less than any other. The only effect of the supposed authority is to make the acceptance complete so soon as it is posted, and authority will obviously be implied only when the tribunal considers that it is a case in which this result ought to be reached. I should prefer to state the rule thus: Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted. It matters not in which way the proposition be stated, the present case is in either view within it. The learned Vice-Chancellor appears to have based his decision to some extent on the fact that before the acceptance was posted the Defendants had sold the property to another person. The case of Dickinson v Dodds (1) was relied upon in support of that defence. In that case, however, the plaintiff knew of the subsequent sale before he accepted the offer, which, in my judgment, distinguishes it entirely from the

(1) 2 ChD 463 (see above).

present case. For the reasons I have given, I think the judgment must be reversed and the usual decree for specific performance made. The Respondents must pay the costs of the appeal and of the action.

Specific performance is explained at p. 23.