Stevenson Jacques and Co v McLean [1880] is a key authority in the law of offer and acceptance. It distinguishes between a counter-offer, which serves as an implied rejection that destroys an offer, and a mere request for information or inquiry. The ruling establishes that such inquiries do not terminate the offer, so the offeree retains the power of acceptance to form a binding contract.

Facts of the Case

The defendant, McLean, offered to sell a quantity of iron to the claimants, Stevenson Jacques and Co, for “40s. nett cash per ton”, stating that the offer would remain open until Monday. On Monday morning, the claimants sent a telegram to the defendant asking: “Please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give”.

The defendant did not reply to this inquiry and instead sold the iron to a third party. Later that same day, but still before the Monday deadline, the claimants sent a second telegram formally accepting the original offer of 40s. cash. When the defendant refused to deliver the iron, the claimants sued for breach of contract.

Legal Issues

The central issue was whether the claimants’ first telegram (asking about delivery over two months) constituted a counter-offer or a mere request for information. Under the established rule in Hyde v Wrench, a counter-offer acts as an implied rejection that “destroys” the original offer, making it impossible to accept later. However, if the telegram was only a request for information, the original offer would remain open for acceptance.

Judgement

The court ruled in favour of the claimants, holding that a binding contract had been formed. The judge determined that the first telegram was a mere inquiry and not a counter-offer. The court reasoned that:

  • The claimants were not saying “I will not buy at your price”; they were simply exploring whether the defendant might be willing to provide more favourable delivery terms.
  • Because the inquiry did not contain a definite proposal to be bound by new terms, it did not reject the original offer.
  • Consequently, the original offer remained “on the table” and was validly accepted by the claimants’ second telegram.

Authority and Significance

This case is a leading authority for the distinction between a counter-offer and a request for information. Key points of significance include:

  • Commercial negotiation: it allows offerees to negotiate or seek clarification on terms (such as payment methods or delivery dates) without the risk of accidentally terminating the offer.
  • Offer preservation: it clarifies that an offer remains capable of acceptance despite preliminary inquiries, provided the offeree does not manifest an intent to reject the original terms.
  • Legal contrast: it serves as the necessary counter-point to Hyde v Wrench, defining the boundary of what does and does not constitute an implied rejection of an offer.