Hartog v Colin & Shields [1939] 3 All ER 566

Facts

  • The defendants, Colin & Shields, intended to sell hare skins to the plaintiff, Hartog, at a price per skin.
  • Due to a mistake, their written offer stated the price per pound, resulting in a significantly lower total price since the skins weighed less.
  • Hartog, being familiar with standard trade practice and the unusual price difference, purported to accept the offer.
  • The defendants rejected performance at the incorrect price, leading Hartog to sue for breach of contract.

Issues

  1. Whether a valid contract exists when the offeree knows or should know that an offer contains a unilateral pricing mistake.
  2. Whether the offeree’s acceptance of an offer with a known error enables him to enforce the contract.

Decision

  • The court held that no valid contract existed between Hartog and Colin & Shields.
  • Justice Singleton found that Hartog was aware of the defendants’ pricing mistake.
  • It was determined that prior negotiations and trade customs evidenced the intended price per skin, not per pound.
  • Hartog’s attempt to accept the erroneous offer was seen as an effort to take advantage of a clear and known mistake.

Legal Principles

  • Where the offeree knows or ought to know of a unilateral error in the offer, particularly as to a fundamental term such as price, no binding contract arises.
  • Acceptance of terms that the offeree knows the offeror did not intend does not lead to contract formation.
  • The rule protects offerors against unfair exploitation of mistakes and affirms the requirement for genuine agreement on contractual terms.
  • Later cases, such as Centrovincial Estates plc v Merchant Investors Assurance Co Ltd [1983] Com LR 158, have affirmed the importance of the offeree’s knowledge of a mistake.

Conclusion

Hartog v Colin & Shields established that if an offeree knowingly accepts an offer containing a unilateral error, particularly regarding price, no valid contract is formed. The case emphasizes fairness in contract negotiations and prevents parties from enforcing agreements arising from known mistakes.

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