Byrne & Co v Leon Van Tienhoven & Co (1880) 5 CPD 344
An offer sent from Cardiff to New York was accepted before the buyers received a letter withdrawing it. Lindley J held that posting the withdrawal did not communicate it to the buyers. A binding contract had therefore been made, and the sellers were liable for refusing to deliver the goods.
The offer and the two letters
On 1 October 1879, Leon Van Tienhoven & Co offered to sell Byrne & Co 1,000 boxes of Hensol tinplates. The sellers were in Cardiff and the buyers in New York. Letters between the two places took ten or eleven days. The offer required acceptance by cable on or before 15 October, with payment by bankers’ acceptance on London or Liverpool in exchange for shipping documents.
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The buyers received the offer on 11 October and accepted it by telegram that day. They confirmed their acceptance by letter on 15 October and sent a letter of credit. Those communications would, by themselves, have established a contract.
Meanwhile, on 8 October, the sellers had posted a letter withdrawing the offer because tinplate prices had risen sharply. It did not reach the buyers until 20 October. By then the buyers had accepted and, on 17 October, resold the tinplates at a profit. They demanded delivery, but the sellers returned their credit and refused to complete the transaction, relying on the withdrawal.
Why posting the withdrawal was insufficient
The question was not simply whether the sellers had changed their minds before acceptance. Lindley J distinguished their decision to withdraw from communicating that decision to the buyers.
He considered the view that a withdrawal prevented agreement even if the other party knew nothing about it, because the parties no longer shared the same intention. He rejected it. An uncommunicated change of mind could not determine the parties’ dealings: until communicated, the revocation had no legal effect.
The next question was whether posting the letter itself amounted to communication. The postal acceptance rule did not supply the answer the sellers wanted. Lindley J explained the rule by reference to the offeror’s express or implied agreement that a properly posted acceptance should be sufficient notification. In that situation, the offeror treated the post office as an agent for receiving acceptance.
There was no equivalent authority from these buyers to treat the posting of a withdrawal as notice to them. Nor was there a legal rule requiring the court to regard the letter as communicated before it arrived. The withdrawal therefore took effect too late: the contract had been formed on 11 October, when the buyers accepted an offer they had no reason to suppose had been withdrawn.
The practical consequence supported that reasoning. If posting alone could withdraw an offer, someone who had accepted it would have to wait to discover whether an earlier withdrawal was still travelling through the post. The judge considered that an unacceptable source of uncertainty for a person acting on an apparently binding agreement.
The separate payment defence
The sellers also argued that the buyers could not recover damages because they had never supplied the bankers’ acceptance required by the contract. This was a separate question from whether the contract had been formed.
Lindley J accepted that the agreed form of payment mattered. Although the buyers’ letters of credit were practically as good, they were not the stipulated bankers’ acceptances. If the sellers had been ready and willing to deliver in exchange for proper acceptances, the buyers’ failure to tender them would have defeated the action.
But the correspondence showed that the sellers were refusing performance because they considered the offer withdrawn. They would not have shipped the goods even if the buyers had sent the correct acceptances. Their later assertion that the goods had been available if the buyers fulfilled the terms was inconsistent with their own letters.
The judge found that the buyers remained ready and willing to perform and would have provided the proper acceptances if the sellers had required them in exchange for shipping documents. Against the sellers’ persistent refusal to perform at all, making that tender would have been useless. The continued refusal operated as a continuing waiver of the requirement to tender.
Why continuing to demand delivery did not prevent a claim
The sellers further argued that the buyers had kept the contract alive by pressing for performance and could not then treat it as broken. Lindley J rejected that conclusion. Trying to persuade the sellers to honour the contract did not remove the buyers’ right to sue when the sellers remained inflexible.
The distinction concerned timing. Because the buyers had not treated the first refusal as a breach at that time, they could not retrospectively treat the contract as broken then. That did not prevent them from relying on the sellers’ continued refusal. Lindley J did not need to identify the precise later date of breach: before proceedings began, there had been a breach which the buyers had not waived.
Decision
Following a trial without a jury, Lindley J gave judgment for the buyers for £375 and costs. The amount of damages had been agreed at trial if liability was established. The sellers failed both on their attempted withdrawal and on their argument about the missing bankers’ acceptance.
Source: full report of the judgment, Common Pleas Division, 6 March 1880 (PDF).
