Reynolds v Atherton
House of Lords
Citations: (1922) 66 Sol Jo 404; (1922) 127 LT 189.
The claimant were a firm of cotton brokers. They acted under a brokerage contract with the defendant, a cotton spinning company. In order to renew their contract, the claimant purchased various shares in the defendant. In 1911, the claimant wrote the company a letter addressed to ‘the directors’. It stated that the claimants were willing to transfer their shares, while they remained the defendant’s broker.
The defendant acknowledged the letter but did not respond until 1918. By that time, the shares had risen considerably in value and the composition of the defendant’s board of directors had changed. Three directors had also died. The defendant sent a letter purporting to accept the claimant’s offer on behalf of the directors who had run the company in 1911 (including the estates of those who had died). The claimant sought a declaration that there was no enforceable contract.
- Was the defendant’s letter a valid acceptance of the claimant’s offer?
The House of Lords held in favour of the claimant. The claimant had made their offer to the board of directors as an entity, whose composition might change. They had not made the offer to the particular directors who ran the company in 1911. The defendant’s letter had therefore not properly accepted the offer.
This Case is Authority For…
Warrington LJ stated, obiter, that an offer automatically lapses by the death of the offeror or offeree before its acceptance.