Felthouse vs Bindley

The case of Felthouse vs Bindley, also known as [1862] EWHC CP J35; 142 ER 1037, is a significant milestone in contract law. It establishes that an individual cannot impose an obligation on another person to reject an offer, as silence does not constitute acceptance. However, this case was later reexamined in the Brogden vs Metropolitan Railway case, where it was determined that acceptance had been communicated through conduct.

Court

Court of Common Pleas

Bench

Justice Willes [Delivery of the judgement], Justice Byles and Justice Keating.

Provisions Applied

1. Mental acceptance is no acceptance.
2. Section 4 of the Indian Contract Act 1872 states that acceptance should be communicated to the offeror.

Facts of Felthouse vs Bindley

In the case of Felthouse vs Bindley, the plaintiff, Paul Felthouse, engaged in a conversation with his nephew, John Felthouse, regarding purchasing a horse. Following their discussion, Paul sent a letter to John, stating that if he did not receive any further communication regarding the horse, he would consider the order accepted and proceed with the horse’s ownership. 

However, John did not respond to the letter as he was preoccupied with auctions. The defendant, Mr Bindley, who managed the auctions, was informed by John not to sell the horse. Unfortunately, the horse was mistakenly sold to another buyer due to an oversight.

Issues in Felthouse v Bindley

Mr Paul Felthouse initiated a lawsuit against Mr Bindley, alleging the tort of conversion. 

To establish a valid contract, Paul needed to demonstrate that he owned the horse. Mr Bindley, on the other hand, contended that there was no valid contract for the horse because Paul’s nephew had not communicated his acceptance of the offer.

In this case, the central issue revolved around whether silence or the failure to reject an offer could be deemed acceptance.

Decision / Outcome of Felthouse v Bindley

The court ruled that there was no valid contract for the horse sale between the plaintiff and his nephew. It was established that there had been no acceptance of the offer, as silence alone could not be interpreted as acceptance, and one party cannot impose an obligation on another. 

Clear and explicit communication is necessary for acceptance of an offer. Despite the nephew’s intention to sell the horse to the plaintiff and expressing interest in doing so, there was no formal contract of sale. Hence, the nephew’s failure to respond to the plaintiff’s offer did not constitute acceptance.

The court’s decision was based on three main grounds. 

• Firstly, silence can be ambiguous and does not indicate an intention to accept. 
• Secondly, acceptance must be communicated to establish when a contract becomes binding. 
• Lastly, the ruling prevents an offeror from exploiting the offeree’s lack of response by making them legally liable unless they expressly reject the offer. 

However, some criticisms have been raised against this decision. It has been argued that the nephew was not an unwilling offeree who needed protection from the rule that silence does not imply consent. Moreover, the nephew had indicated his acceptance of the plaintiff’s offer by instructing the defendant not to sell the horse. Nevertheless, it is important to note that this case has not been overruled.

Analysis of the Judgment

In its honourable decision, the Court of Common Pleas affirmed the requirement of acceptance for the formation of a valid and binding contract. In the case at hand, Mr Felthouse had sent a letter to his nephew, offering a price for the horse and placing an obligation on the nephew to respond to the offer. However, the nephew failed to reply before the horse was sold. 

The court held that the nephew’s intention to sell the horse to his uncle at the offered price could not be accepted until it was communicated to him directly. The communication of acceptance to the auctioneer was deemed ineffective since the acceptance needed to be conveyed to the offeror for the contract to be formed.

The court referred to the judgment in Dobell v. Hutchinson, stating that acceptance did not need to be in writing. However, in this case, no acceptance had been made, and the horse had not been delivered, which was essential for forming a contract. The horse was sold on February 25, 1861, and there was no evidence of a binding contract between Felthouse and his nephew. 

As the plaintiff did not receive permission from his nephew, the notion that the plaintiff burdened his nephew with the duty to reply to the letter, with silence deemed as acceptance, held no merit. The plaintiff had no right to impose an obligation on John Felthouse to respond to the letter and indicate acceptance or rejection of the offer. Since the sale of the horse was not completed, the plaintiff had no grounds to complain about its sale.

The letter from the nephew to his uncle on February 27, 1861, expressing his intention to accept the offer on the terms and conditions specified by his uncle, came after the horse had already been sold on February 25, 1861. Until then, the nephew was not bound by any contract since no acceptance had been made. 

Therefore, this letter, sent to the plaintiff after the sale of the horse, could not be considered admissible evidence against the defendant and did not confer any rights or authority to the plaintiff regarding the horse. 

There was no evidence to support the plaintiff’s claim of ownership at the time of the sale. Since the plaintiff did not possess vested rights in the property, his action against the defendant for conversion could not be upheld.

Conclusion

The court decided no valid contract existed for the horse between the plaintiff and his nephew. The crucial element of acceptance was missing in this case, as silence alone did not indicate acceptance, and one party cannot impose an obligation on another. It was established that clear and explicit communication is necessary to accept an offer.

The case of Felthouse vs Bindley establishes silence does not constitute acceptance. Hence, an individual cannot impose an obligation on another person to reject an offer in such cases.