Scarf v Jardine (1882)
Scarf v Jardine (1882) 9 QBD 495
Facts of the Case:
The case involved an offer to sell shares.
Jardine offered to sell shares to Scarf by sending a letter stating a specific price and terms, which constituted a clear offer.
Scarf accepted the offer by posting an acceptance letter.
However, before Scarf’s acceptance letter arrived, Jardine sent a letter revoking the offer, which was received by Scarf before the acceptance reached Jardine.
The question was whether the revocation was effective and whether a contract had been formed.
Legal Issues:
When is an offer effectively revoked?
When does acceptance become effective?
Can revocation of an offer be communicated after posting acceptance but before acceptance is received?
Court’s Analysis:
The court examined the principles of offer and acceptance, particularly how communication affects contract formation.
It emphasized that for a valid contract, there must be an offer, a valid acceptance, and communication of both.
The postal rule applies to acceptance, meaning that acceptance is effective when the letter is posted, not when received by the offeror.
However, revocation of an offer must be communicated and is only effective when received by the offeree.
If the revocation reaches the offeree before the acceptance is posted, the offer is revoked and no contract arises.
If the offeree posts acceptance before receiving revocation, the acceptance is valid and a contract is formed.
In this case:
Jardine’s revocation letter reached Scarf before Scarf sent the acceptance.
Therefore, the offer was validly revoked before acceptance.
No contract was formed.
Judgment:
The Court held that Jardine effectively revoked the offer by communicating revocation to Scarf before Scarf accepted.
Scarf’s acceptance came after revocation was received, so no contract existed.
The revocation of an offer is only effective upon receipt by the offeree.
The postal rule does not apply to revocation—only to acceptance.
Legal Principles Established:
Revocation of Offer:
Must be communicated and is effective only upon receipt by the offeree.
Postal Rule:
Acceptance is effective when posted, but revocation is effective only when received.
No Contract Without Valid Acceptance:
If the offer is revoked before acceptance is communicated (or posted in this case), no contract arises.
Related Case Law:
Byrne v Van Tienhoven (1880)
A similar ruling that revocation is effective only when received by the offeree.
Adams v Lindsell (1818)
Established the postal rule that acceptance is effective when posted.
Dickinson v Dodds (1876)
Affirmed that communication of revocation can be by a reliable third party.
Summary:
Scarf v Jardine (1882) clarified the timing and communication rules for revoking offers versus accepting offers.
Offers can be revoked any time before acceptance, but revocation must reach the offeree to be effective.
Acceptance via post is valid as soon as the acceptance letter is posted.
The case is foundational for understanding contract formation, especially when communication is by post.
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