CASE ANALYSIS: FELTHOUSE v. BINDLEY
“Mere silence does not amount to acceptance”. This is a general principle that has been widely observed and analyzed in the field of contract law. The rule was first brought up in the landmark judgement of Felthouse v. Bindley.
This case highlighted how communication forms an essential component of acceptance under a contract. The main rationale behind this idea was that only having the intention to accept an offer cannot amount to acceptance; that communication of acceptance must be initiated by the offeror, for it to be considered as a valid and existing contract.
This is important to ensure that a party not willing to contract doesn’t get bound by it.
Some exceptions to this rule have also emerged over the past years, wherein silence can amount to acceptance of an offer.
It would depend on the situation and facts of each case. Nevertheless, this landmark case holds great relevance as the rule that emerged from it laid down the basis for the concept of acceptance. This is included in section 2(b) of the Indian Contract Act, 1872.
Facts in brief
In this case, the plaintiff, Paul Felthouse, was a builder living in London. He wished to purchase a horse from his nephew, John Felthouse. He managed to negotiate an offer to purchase the same. There was some misunderstanding over the price at which the horse would be sold.
Uncle Paul offered a lesser price than what nephew asked for. Later, he sent a letter to his nephew stating that “if I hear no more about him, I consider the horse mine at £30 15s”. There was no answer to this letter from my nephew’s side. But, he did instruct William Bindley (defendant), an auctioneer, to “reserve the horse” and not to sell it.
However, the sale of the horse took place by mistake and it also fetched a greater sum of money than what Paul Felthouse offered. Bindley then wrote a letter to the plaintiff, acknowledging and apologizing for his mistake.
The nephew also wrote to his uncle expressing his annoyance caused by the mistake of the auctioneer. After learning that the horse has been sold, Paul Felthouse initiated proceedings against the auctioneer, Bindley, suing him for conversion.
- Whether a valid contract existed between Paul Felthouse and his nephew?
- Could silence from nephew’s side constitute as an acceptance or not?
- Did the plaintiff have possession of the horse sold by the defendant in auction?
- Whether conversion took place?
- Plaintiff argued that a valid contract existed since an offer was made and there was implied acceptance on part of the nephew.
- Plaintiff further contented that he had been the owner of the horse when it was sold at auction by Bindley. He claimed that Bindley improperly dealt with his property. Thus, he argued that Bindley be held liable for conversion.
- The defendant dismissed the admissibility of the letter which the nephew wrote to his uncle after sale of the horse.
- He submitted that since there was no formal communication between the nephew and uncle regarding the acceptance of the offer, a valid contract didn’t exist between them. Respondent contented that since there was no binding contract at the time of the sale, he could not be sued for conversion.
The Court, in this case, ruled that no tort of conversion occurred from the respondent’s side as the plaintiff did not have possession of the horse at the time of the sale.
It was held that acceptance of the offer should be communicated properly and mere silence cannot amount to acceptance of the contract.
Even though the nephew had wanted to sell off the horse and uncle Paul had the intention to accept the offer, it would not constitute a valid contract due to the absence of proper communication.
The court stated that the letters written by Paul Felthouse, which has no response from his nephew’s side, cannot amount to acceptance in itself. Since there was no clear communication between the parties, it would not constitute a valid contract.
Furthermore, the letter in which the nephew told that he asked the defendant to reserve the sale and was displeased by his mistake was considered. The court observed that it could be viewed as admissible evidence against Bindley as the plaintiff did not have title over the horse.
Willes J. stated that “it is clear that there was no complete bargain and that uncle had no right to impose upon the upon the nephew a sale of his horse…it stood as an open offer.”
Thus, although the nephew had asked the defendant to reserve the sale of the horse, it was not binding upon him since there was no communication to accept the offer. Bindley would not be bound for conversion.
It was held that the offer was not accepted properly at the time of the sale. No valid contract was made to pass the ownership of property in the horse.
Hence, the plaintiff had no possession or right over the horse in question, giving the plaintiff no right to sue the defendant for overselling something which was not owned by him.
Byles J. agreed with this decision and Keating J further emphasized that even though an offer was made, there was no acceptance of that offer which would be binding the nephew under contract.
The main rule observed, in this case, was that the offeror cannot bind the other party by contending that mere silence to accept an offer would amount to acceptance.
It was made clear that the intention of the nephew to sell the horse to uncle does not signify acceptance in itself. Communication of acceptance, either by actions or words, thus form an essential element to constitute a valid contract.
No communication in writing was made to bind the contract. They were still in process of negotiating and complete and proper acceptance was not conveyed.
The horse was sold at a time when neither the nephew nor the defendant was bound by the contract.
The plaintiff did not have the property of the horse and thus, the letters submitted by the uncle to the nephew complaining about the sale would not be submitted as evidence. It did not justify his decision to sue the defendant for conversion.
Therefore, there was no valid deal between the nephew and his uncle. To make a contract between parties binding, offer and acceptance of the offer are essentials.
In addition to that, it must be ensured that the acceptance has been communicated well.
The mere intention to accept the offer does not bind the offeree in a contract. In this case, the plaintiff failed to do the same and the case was accordingly dismissed.