Hyde v. Wrench is a landmark case, in the history of Contract Law. The case addresses the concept of specific performance of the initial offer in the event in which the first offer is rejected and a counteroffer is made.
Specific performance is a remedy granted by the court to the plaintiff in instances when the defendant breaches the contract and is obligated to fulfil the contract per its terms and specifications.
This case inevitably leads to the end of all of the debates and contentions made on counter-offers and their connection to the initial offers. Sir Jenkins CJ ruled in Haji Mohd Haji Jiva v. Spinner that any deviation from the initial offer voids acceptance.
In other words, an acceptance with a modification is not an acceptance; it is only a counteroffer that must be approved by the original offeror for it to form the basis of a contract.
An example would be, A offers B, a horse for 50000 rupees, but B tells him, that he shall buy the horse for 4000 rupees, this is considered to be a counteroffer, indicating that the offer that was initially made, has been rejected.
Mr Wrench in this case had planned to sell his land in Luddenham, and offered it to Mr Hyde, for 1200 pounds, via his agent, but Hyde rejected this offer of his.
Wrench later on, on 6th June made another offer stating that he would sell the land for 1000 pounds but wouldn’t be making any changes in the price henceforth, and Hyde was required to lodge the amount in the bank of Michaelmas until the land was free of all its taxes, costs and so forth, and if failed to fulfil this term, he would be considering another application of purchase.
Unfortunately, the plaintiff declined the defendant’s offer once more, this time offering to give 950 pounds. In response to this counter-offer, the defendant requested a few days to ponder upon this offer made by Hyde.
In the letter, he had written to his tenant for an explanation to some questions, and as soon as he had a response from him, he would speak with Hyde and try to finalise the possible purchase of his property. He also stated that he was not discussing the transaction with anybody else.
A few days later, Wrench wrote to Hyde that he would not sell his estate to him because he is unwilling to sell the farm at such a cheap price, and Hyde then, agreed to buy the land for the price set by Wrench– He pleaded to confirm the receipt of Wrench’s letter.
And as a result of this, he would immediately accept the terms under which the land was sold. He was obligated by Wrench directing his solicitor to contact him as soon as possible about the title, for the reason that was given to him.
However, Wrench refused to sell the land to Hyde, even after he had accepted his offer. Hyde filed a lawsuit against Wrench for specific performance of the contract, claiming that the defendant’s offer for sale was not revoked before its acknowledgement, even though the defendant had stated in reply to the plaintiff’s last letter that he would consult with his solicitor on the matter.
The question, in this case, was whether the defendant was obligated to fulfil the initial offer even after the plaintiff submitted a counter-proposal in pursuance of the original offer.
- Is the defendant required to fulfill the initial offer or is the original offer canceled in the event of a counter-proposal?
- Whether Wrench violated the contract by refusing to sell the land to Hyde?
- Was there a legitimate contract between Hyde and Wrench?
Rule of Law
It is a well-established legal concept that approval must be total and unequivocal to be legally binding. When adjustments are made to the terms and conditions of the original offer, the original offer is terminated.
When the offeror makes an offer to the offeree, he has the option of accepting the offer or negotiating, at his option. When the offeree accepts the offer categorically or without any discussions, an agreement is formed which shall be legally binding on the parties.
However, if the offeree attempts to renegotiate the price or any other parameters of the offer, it terminates the first offer and the offeree is unable to return to it and accept it. As a result, the offeror is no longer obligated to execute the initial offer.
On behalf of the defendant, Mr Kindersley and Mr Keene contended that the assent must be unambiguous to form a legal contract.
There must be both unconditional and conditioned approval. Whilst Mr Pemberton and Mr Freeling, appearing on behalf of the plaintiff, argued that because the defendant’s offer was not revoked before its approval by the plaintiff, the plaintiff was knowledgeable to concede the defendant’s offer as long as it persisted and the defendant was not taken aback by it.
According to them, as long as an offer is not withdrawn, the plaintiff is free to accept it. Therefore, Lord Langdale held that the parties did not enter into a legitimately binding contract for the acquisition of the property.
Defendant offered to sell it for £1000, and if that had been immediately unquestioningly accepted, there would have undeniably been a perfectly binding contract; conversely, Plaintiff made his offer, to purchase the property for £950, and thus declined the offer initially made by the Defendant and it was not competent for the plaintiff to revive the offer after declining the opening offer.
As a result, the court rejected the plaintiff’s claims, and the case was decided in favour of the defendant. It was determined that no binding contract existed between Hyde and Wrench, and so the defendant was not required to fulfil the deal.
An approval can be legally binding and a contract can be formed, only when it is unequivocal. A counteroffer is the same as a fresh offer. The parties are under no obligation to accept the offer.