Contract Law

Harvey v. Facey

[1893] AC 552

Facts

Harvey wanted to purchase a property called Bumper Hall Pen, which was owned by Facey.
Harvey sent Facey a telegram asking two questions:
“Will you sell us Bumper Hall Pen?”
“Telegraph lowest cash price.”
Facey replied:
“Lowest price for Bumper Hall Pen £900.”
Harvey immediately responded:
“We agree to buy Bumper Hall Pen for the sum of £900 asked by you.”
Facey did not proceed with the sale.
Harvey argued that Facey’s telegram amounted to an offer to sell the property for £900 and that Harvey had accepted it.
Facey argued that he had merely answered the question regarding price and had never made an offer to sell.

Whether Facey’s statement of the “lowest price” amounted to a definite offer to sell the property for £900.
Whether Harvey’s subsequent telegram constituted an acceptance resulting in a binding contract.

A valid offer must show a clear willingness to be legally bound as soon as the other party accepts.
A mere statement of price or supply of information is not necessarily an offer.
An acceptance can create a contract only where there is an existing and definite offer capable of acceptance.
The court must objectively examine the words used and determine whether they indicate final contractual intention.

Harvey’s first telegram contained two separate questions:
whether Facey was willing to sell; and
what was the lowest price.
Facey answered only the second question.
He stated the lowest price but did not say that he was willing to sell the property to Harvey.
The words “lowest price £900” merely communicated information regarding the price at which Facey might consider selling.
They did not contain an express promise such as:
“I offer to sell for £900”; or
“I will sell to you for £900.”
Therefore, Facey’s telegram did not demonstrate a final intention to be bound.
Harvey’s reply could not operate as an acceptance because there was no offer before him.
Instead, Harvey’s message stating that he agreed to buy for £900 was itself an offer to purchase.
That offer required acceptance by Facey.
Since Facey never accepted it, no contract was formed.
The Court focused on the distinction between:
preliminary negotiations, where parties exchange information; and
a contractual offer, which gives the other party the power to create a contract through acceptance.
The case shows that merely mentioning a price does not automatically mean that the owner has committed to sell.
The whole communication must establish that the owner intended to part with the property on acceptance of the stated terms.
That intention was absent here.

The Privy Council held that Facey’s telegram was merely a statement of the lowest price.
It was not an offer to sell.
Harvey’s response was therefore an offer to purchase, not an acceptance.
Since Facey did not accept Harvey’s offer, no binding contract arose.
Use this case for: a statement of price is not, without more, an offer to sell.