Stevenson v McLean (1880) 5 QBD 346

Facts

  • McLean, the defendant, offered to sell iron to Stevenson Jaques & Co., the claimant, at 40 shillings per ton, stating the offer would remain open until the following Monday.
  • Before Monday, Stevenson sent a telegram to McLean asking whether payment could be made over two months, or alternatively, what the longest available credit term was.
  • Stevenson’s initial telegram sought clarification of payment terms and did not directly accept or reject the original offer.
  • On Monday, Stevenson sent a second telegram accepting McLean’s original offer.
  • Before receiving Stevenson’s acceptance, McLean sold the iron to a third party and sent a telegram revoking the offer by notifying Stevenson of the sale.
  • The key dispute centered on whether Stevenson’s first telegram constituted a counter-offer (thus rejecting the original offer) or a mere inquiry, and whether McLean’s revocation was communicated effectively before valid acceptance.

Issues

  1. Did Stevenson’s first telegram constitute a counter-offer, thereby terminating the original offer, or was it a mere inquiry which left the offer open?
  2. Was McLean’s revocation of the offer effective given the timing and method of communication?
  3. Does specifying a time for acceptance (“open until Monday”) obligate the offeror to keep the offer open for that period without consideration?
  4. How do rules regarding acceptance and revocation apply to contracts formed by telegram or other near-instantaneous means of communication?

Decision

  • The court held that Stevenson’s first telegram was a mere inquiry, not a counter-offer; the original offer therefore remained open.
  • The defendant’s revocation was not effective because it was not communicated to the claimant before the claimant sent acceptance.
  • A statement that an offer is open until a certain date does not bind the offeror to keep it open unless there is consideration.
  • Acceptance by telegram forms a contract when the message of acceptance is received, and revocation must likewise be communicated before acceptance is dispatched to be effective.
  • The contract was validly formed in favour of Stevenson.

Legal Principles

  • A simple inquiry about terms does not constitute a counter-offer and does not terminate the original offer.
  • Revocation of an offer is only effective when it is actually communicated to the offeree before acceptance is sent.
  • An offeror is not obliged to keep an offer open for a stated period unless supported by consideration.
  • In near-instantaneous communications (such as telegram), a contract is formed when acceptance is received by the offeror, and not when sent, differing from the postal rule.

Conclusion

Stevenson v McLean establishes that mere inquiries do not amount to counter-offers, that offers can be revoked before acceptance unless consideration is provided, and that revocation is effective only upon communication prior to acceptance, especially in cases of near-instantaneous communication.

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