Hyde v Wrench [1840] EWHC Ch J90

Facts

  • The defendant, Mr. Wrench, offered to sell his farm to the plaintiff, Mr. Hyde, for £1,000.
  • Mr. Hyde did not accept the offer outright but instead proposed to purchase the farm for £950, which was a departure from the original terms.
  • Mr. Wrench refused the counter-offer of £950.
  • Mr. Hyde then attempted to accept the original £1,000 offer.
  • Mr. Wrench declined to sell the property at either price.
  • Mr. Hyde initiated legal proceedings for breach of contract, contesting whether a binding agreement existed after his initial counter-offer had been rejected.

Issues

  1. Whether Mr. Hyde’s counter-offer of £950 constituted a rejection of Mr. Wrench’s original offer of £1,000.
  2. Whether a binding contract could arise after a counter-offer when the offeree later attempts to accept the original offer.
  3. Whether any communication from the offeree, such as a request for information, amounts to a counter-offer and rejection of the original offer.

Decision

  • The High Court, under Lord Langdale MR, held that the counter-offer of £950 amounted to a rejection of the original offer of £1,000.
  • The original offer, once rejected by the counter-offer, could not be later accepted by Mr. Hyde unless renewed by Mr. Wrench.
  • A binding contract was not formed, as there was no unequivocal acceptance of the original terms.
  • The Court clarified that an unequivocal acceptance is required for a contract to be formed, and any deviation, such as a counter-offer, removes the original offer from consideration.

Legal Principles

  • A counter-offer operates as a rejection of the original offer and extinguishes its validity.
  • Once an offer is rejected by counter-offer, it cannot subsequently be accepted unless the offeror renews the original offer.
  • Clear and unequivocal acceptance is necessary to form a legally binding contract.
  • Not every response constitutes a counter-offer; mere inquiries or requests for information, as clarified in Stevenson v McLean (1880) 5 QBD 346, do not amount to rejection of an offer.

Conclusion

Hyde v Wrench established that a counter-offer constitutes rejection of an original offer, preventing later acceptance unless the offer is renewed. This principle underpins certainty in contract law by requiring clear acceptance on identical terms for contract formation, while distinguishing genuine inquiries from counter-offers.

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