Byrne v Van Tienhoven (1880) 5 CPD 344

Facts

• The defendants, Van Tienhoven, located in Cardiff, sent a letter on October 1st to the plaintiffs, Byrne & Co. in New York, offering to sell 1,000 boxes of tinplates.
• The offer letter took about ten to eleven days to arrive in New York.
• On October 8th, Van Tienhoven sent a second letter attempting to revoke their previous offer, following a rise in tinplate prices.
• Byrne & Co. received the original offer on October 11th and promptly accepted via telegram, later confirming by letter.
• The letter containing the revocation was not received by Byrne & Co. until October 20th.
• The central question was whether a contract was formed based on the acceptance before Byrne & Co. received notice of revocation.

Issues

1. Whether the revocation of an offer is effective upon dispatch or only upon actual communication to the offeree.
2. Whether the postal rule, which deems acceptance effective upon posting, also applies to the revocation of offers.

Decision

• The court held that the revocation of the offer was only effective upon its receipt by Byrne & Co., not when the revocation letter was sent.
• A contract was formed when Byrne & Co. posted their acceptance on October 11th, as this was prior to them receiving the revocation.
• The postal rule applies to the acceptance of an offer but not to the revocation of one.

Legal Principles

• Revocation of an offer must be communicated and is only effective upon actual receipt by the offeree.
• The postal rule deems acceptance effective when properly posted, but this rule does not extend to revocation.
• The distinction ensures that offerees are not unfairly prejudiced by revocations they have not received, promoting certainty in contractual relations.

Conclusion

Byrne v Van Tienhoven established that revocation of an offer takes effect only upon communication to the offeree, distinguishing it from acceptance, which may be effective upon posting under the postal rule, thereby providing clear rules for contract formation and protecting both parties from uncertainty in commercial dealings.