‘It is as if the facts of this case have been devised for an examination question on the law of contract for first year law students. They raise some basic questions in relation to offer and acceptance in the law of formation of contract.’ Dyson LJ

The case of Pickfords v Celestia (2003) arises in the area of revocation of an offer in contract law. It sets out very clearly the law surrounding offers, counter offers and acceptance.

The Facts

The claimant provided business moving services, the defendant was an IT company that wanted to move its operations from Bradford Wood to Telford in Shropshire.

The focus of the case was where offer and acceptance had occurred and the difference that made to the amount owed to the claimants for their services.

This revolved around three documents…

The Documents

Document One

The claimant sent a fax to the defendant on 13 September 2001. The fax was a ‘budget cost’ for relocation. It was quoted as £890 plus VAT per vehicle load with an estimated 96 vehicle loads needed. Plus a few extras for things like insurance. The fax stated; ’Therefore we have an estimated budget figure to include all the above at 100k’.

Document Two

After a survey of the defendant’s precise needs the claimant sent a much more detailed ‘move program’ on 27 September 2001. This included a ‘Fixed Price Schedule’ at £98760.00 plus VAT. Along with the detailed proposal this document also included Pickfords’ terms and conditions which had not been included in the first fax.

Document Three

On 15 October 2001 the defendant sent a message to the claimants headed ‘CONFIRMATION’. It followed with…

‘PLEASE NOTE THE FOLLOWING ORDER NUMBER HAS BEEN RAISED TO COVER YOUR QUOTATION

‘Ref your fax 13/9/01 from MDawson/PSpencer

Relocation of Celestia Equipment from Bradwell Wood to Telford

(Not to exceed 100K)’

The Dispute

The claimant had accepted the offer and the defendant carried out the work. However, a dispute arose as to which offer had been accepted. The claimant’s case was that the third document was an acceptance of their 27 September quote but the defendant argued that they had accepted the 13 September quote and should therefore not be charged over 100k for the job.

The court held that both faxes were valid offers but did the second offer revoke the first even though there had been no express revocation? And which one had the defendant accepted?

Is the second offer a revocation of the first?

When discussing these points Dyson LJ gave the example of a painter who is hired to carry out a decoration job. They firstly quote a day rate and then later quote a fixed price for the job. In this scenario the second does not revoke first but simply gives the offeree two options from which they can chose. However, this case was not comparable. The second quote in this case was too different from the first to exist at the same time. It included a different method of calculating the costs and it imposed different contractual terms, e.g. the terms and conditions which hadn’t been included in the first fax. Therefore, the court held that the second had been an implied revocation of the first offer. (See Dickinson v Dodds)

Counter Offers

The court also found that that the defendant had accepted the first offer, this was clear from the reference to the date in their acceptance and the addition of ‘not to exceed 100K’ which was clearly a reference to the 13 September fax. However, as the first offer had been revoked by the second their acceptance could not give rise to a valid contract.

Instead they had unknowingly made a counter offer. Dyson LJ highlighted that the inclusion of ‘not to exceed 100K’ was a material new term and therefore a counter offer had been made. This counter offer was then accepted by conduct when Pickfords carried out the relocation. (See Hyde v Wrench)

Conclusion

Therefore the parties had contracted on the terms of the initial offer. Celestia’s ‘acceptance’ of it had been a counter offer which was accepted by Pickfords’ conduct.

* Arden LJ added that although the second offer had been sent to a different employee at Celestia this made no difference. It is enough that it was received by the company, it did not have to be received by the same specific individual.

For more detail on Revocation of an Offer, Acceptance and Counter-Offers visit the Termination of an Offer page.

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