Scottish Court of Session Decisions

Upon 2nd March 1893 Underwood & Son, Limited, hay and straw importers, Brentford, who also carried on business in Leith, offered verbally through their agent in Leith to purchase a quantity of straw from Jacobsen, Sons, & Company, merchants in Edinburgh and Bona, the straw to be shipped during the month of March. The terms of the offer were reduced to writing and confirmed by Jacobsen, Sons, & Company by a letter addressed to Underwood & Son the same day, in which it was stated that the offer was ‘for reply by Monday 6th inst.” Upon 6th March Jacobsen, Sons, & Company wrote accepting the offer. This letter was posted in Edinburgh after six o'clock on the evening of the 6th. In ordinary course it would have been delivered to Underwood & Son by the first post on the 7th, but owing to the name of the street not being specified in the address it was not delivered until the second or midday post. Upon the same day Underwood & Son wrote to Jacobsen, Sons, & Company as follows—“As our offer for the straw was for reply on Monday, you will have to consult us again before confirming sale … in the meantime there is no purchase.” Jacobson, Sons, & Company refused to accept this repudiation of the contract, and subsequently tendered delivery of the straw, which Underwood & Son refused to take. Jacobsen, Sons, & Company accordingly, after intimation to Underwood & Son, sold the straw in Glasgow through a neutral broker, and then brought an action against Underwood & Son for payment of the difference between the contract price and that actually realised for the straw.

The defenders in answer averred that by the terms of the pursuers' letter of 2nd March, and “according to the understanding and custom of trade and of business men, the defenders' offer was open for acceptance until the end of business hours on Monday 6th March and no longer.”

They pleaded, inter alia—“(2) The pursuers having failed to accept the defenders' offer in terms thereof, there was no concluded contract, and the defenders ought to be assoilzied.”

Proof was allowed. The defenders failed to prove their averment as to custom of trade.

It appeared that the pursuers' letter of acceptance was addressed “Underwood & Son, Argyll Lindsay, Esq., Leith,” that

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previous letters from the pursuers to the defenders had been similarly addressed, and that the defenders had never complained that the letters were insufficiently addressed.

Upon 22nd December 1893 the Lord Ordinary decerned in terms of the conclusions of the summons.

“ Opinion.—[After stating the facts]—I am of opinion that the pursuers are entitled to decree.

The defenders aver on record what they call an ‘understanding and custom of trade and of business men,’ to the effect that when a limit of time is fixed for reply to an offer, the reply must be not merely despatched, but received within that limit of time. They add the further restriction ‘before the end of business hours’ on the day named. But their witnesses to custom do not all go so far as that. I suppose they felt the difficulty of fixing the end of business hours. At all events, the majority contented themselves with saying that the reply must be received on the day named.

Now, I do not doubt that usage of trade may affix to the language of a contract a secondary or non-natural meaning, provided it be so notorious that both parties must be presumed to have used the language in that sense, and provided also it be consistent with law. But I regard this alleged usage as failing in both of these respects, especially the latter. The defenders' witnesses speak rather to their own interpretation of this particular contract than to any experience of a general understanding. And their interpretation of it, whether or not it be according to reason, is not, I think, according to law.

Professor Bell in his Commentaries (Lord M'Laren's Ed., i., p. 344) states the law thus—‘It is the act of acceptance that binds the bargain, and in the common case it is not necessary that the acceptance shall have reached the person who makes the offer. An offer to sell goods is a consent provisionally to a bargain, if it shall be accepted within a certain time fixed by the offer or by the law. Until the expiration of that time the consent to the sale is held to subsist on the part of the offerer, provided he continues alive and capable of consent at the time of acceptance. From the moment of acceptance there is between the parties in idem placitum concursus et conventio, which constitutes the contract of sale. To this, however, an exception may be made by the offerer limiting it so that the arrival of the acceptance only shall bind the bargain.’

The rule thus stated by Professor Bell is not limited to the case of an acceptance despatched by post. But authoritative decisions, and particularly the judgment of the House of Lords in Dunlop v. Higgins, 6 Bell's App. 195, and of the English Court of Appeal in Household Fire Insurance Company v. Grant, L.R., 4 Exch. Div. 216, have established that where an offer is made which, expressly or by implication, authorises the sending of an acceptance by post, the posting of the letter of acceptance completes the contract, whatever delay there may be in its delivery. In the latter case, indeed, the letter never reached its destination at all. On that special ground Lord Bramwell dissented, but even he conceded that ‘where a posted letter arrives, the contract is complete on the posting.’

Here I cannot doubt that the offer was made in such circumstances as to authorise an acceptance by post. The offerer was in Leith, the acceptor in Edinburgh. The offer, though made verbally, was confirmed by letter, and the defenders' agent admits that he expected a letter of acceptance.

In neither of the cases to which I have referred was any day fixed for reply. But the principle which Mr Bell states, and which these cases illustrate, is just as applicable to a case like the present as to one where the reply is to be given in due course. The principle is that the reply is made and the contract concluded when the acceptance is despatched. To the same effect (though complicated by a question as to retractation) is the case of Thomson v. James, 18 D. 1.”

The defenders reclaimed, and argued—The words in the letter “This for reply by Monday 6th inst.” were elliptical and ambiguous; it was, therefore, necessary to have evidence to show what was the proper meaning of the words in the circumstances— Bowes v. Shand, June 8, 1877, L.R., 2 App. Cas. 455; Ashforth v. Redford and another, November 6, 1873, L.R. 9 C.P. 20. The evidence showed that the ordinary meaning which mercantile men in Leith put upon these words, although perhaps not strictly a custom of trade, was, “I must have the acceptance in my hand by Monday.” The words in this case were different from those used in other cases. In the second place, assuming that the defenders were wrong in their construction of the letter, it was admitted that they ought to have got it by the first post on Tuesday, but they did not get it until noon. In such a business the delay of a few hours was important, and as the delay occurred through the fault of the pursuers in putting an insufficient address upon the envelope, they could not claim damages, as the defenders were entitled to think the pursuers did not intend to take acceptance of their offer.

The pursuers argued—There was no proof of a custom of trade at all. What the witnesses deponed to was merely their opinion upon the words of the letter when shown to them after the transaction had taken place—that was not enough. It was plain, apart from the evidence of the defenders' witnesses, that the pursuers had validly accepted the defenders' offer. Upon Monday 6th March, the day stipulated for in the offer, they had written and posted a letter stating their willingness to carry out the contract as arranged, and that was precisely what was stated to be binding on both parties by Lord Shand in the case of Mason v. Benhar Coal Company, June 2, 1882, 9 R. 883. The pursuers had written the reply on Monday that bound them to the contract, and that was

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sufficient— Higgins & Son v. Dunlop, Wilson, & Company, February 24, 1848, 6 Bell's App. 195; Thomson v. James, July 12, 1855, 18 D. 1. As regarded the objection that the letter had been unduly delayed, that was the fault of the post office, for which the pursuers were not liable, but the defenders were themselves to blame because it was proved that letters with the same address had been delivered to them before, and they made no complaint.

At advising—