Harvey v. Facey Case Summary: Offer vs Invitation to Treat

What is the significance of Harvey v. Facey in contract law?

A contract is formed only when a valid offer (called a "proposal" under Section 2(a) of the Indian Contract Act, 1872) is met by an unqualified acceptance, supported by consideration and an intention to create legal relations. Harvey v. Facey [1893] AC 552 is the classic authority on the threshold question that comes before all of this: was a statement actually an offer at all, or merely an invitation to treat (in Indian usage, an "invitation to offer")? The Privy Council held that simply quoting the lowest price in answer to an enquiry is not an offer that can be accepted — a distinction that still governs price quotations, advertisements, tenders and shop displays today.

Harvey v. Facey: background and facts

Harvey v. Facey was decided by the Judicial Committee of the Privy Council on 29 July 1893, on appeal from the Supreme Court of Jamaica. In October 1891, L.M. Facey was in negotiations with the Mayor and Council of Kingston to sell his property, Bumper Hall Pen, for £900. While that was going on, the appellants — Harvey and another, solicitors in Kingston — became interested in the same property.

Three telegrams passed between the parties:

#	Sender	Telegram
1	Harvey → Facey	"Will you sell us Bumper Hall Pen? Telegraph lowest cash price."
2	Facey → Harvey	"Lowest price for Bumper Hall Pen £900."
3	Harvey → Facey	"We agree to buy Bumper Hall Pen for the sum of £900 asked by you."

Facey did not reply to the third telegram and did not sell to Harvey. Harvey sued, claiming the exchange had produced a binding contract. The core legal question was whether Facey's second telegram — quoting the price — was an offer capable of acceptance, or merely an invitation to treat.

Facey's telegram: a statement of price, not an offer

Facey's telegram simply stated, "Lowest price for Bumper Hall Pen £900." The Privy Council, in a judgment delivered by Lord Morris, held this was not an offer. It was, in the Board's words, "a precise answer to a precise question" — Harvey had asked two questions (will you sell, and at what price), and Facey answered only the second. Quoting the lowest acceptable price said nothing about a willingness to be bound to sell at that price.

The reasons it was an invitation to treat, not an offer, were:

• It showed no clear intention to be legally bound — stating a price is not the same as promising to sell.
• It answered only the question of price, leaving the question "will you sell us" unanswered.
• "The mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at that price to the person making the enquiry" (Lord Morris).

Harvey's response was itself an offer

Harvey replied, "We agree to buy Bumper Hall Pen for the sum of £900 asked by you," believing this was an acceptance that completed the contract. The Privy Council disagreed. Because Facey's second telegram was not an offer, there was nothing for Harvey to accept. Instead, Harvey's third telegram was the first genuine offer in the exchange — an offer to buy at £900 — which Facey was free to accept or reject. Facey never accepted it, so no contract came into existence.

The Privy Council's decision

The Privy Council held that no binding contract existed between Harvey and Facey. Facey's telegram quoting £900 was an invitation to treat, not an offer. For a contract there must be a definite offer made with an intention to be bound, followed by acceptance. Facey's reply lacked that intention — it merely supplied information in answer to an enquiry — so Harvey's purported "acceptance" created nothing. Harvey's appeal was dismissed.

Defining a valid offer

One enduring contribution of Harvey v. Facey is its illustration of what an offer must contain to be capable of acceptance:

• Intention to be bound: the offeror must show a willingness to be legally bound on the stated terms if they are accepted.
• Certainty of terms: the terms must be definite enough to define the parties' obligations; vagueness defeats an offer.
• Communication: the offer must reach the offeree — an uncommunicated offer cannot be accepted.
• Not a mere quotation: language that simply supplies information or quotes a price is treated as an invitation to treat, not a firm offer.

Invitations to treat

An invitation to treat (Indian courts often say "invitation to offer") is a communication that invites the other party to make an offer, rather than making one. It signals a willingness to negotiate but is not capable of acceptance. Recognised examples include the display of goods in a shop window or on a shelf, advertisements, catalogue and website listings, auction calls for bids, and — as in this case — a quotation of price in answer to an enquiry.

The practical consequence is that the party issuing an invitation to treat keeps control: a shopkeeper can refuse to sell at the displayed price, and a seller who quotes a price can still decline the buyer's offer. Misreading an invitation to treat as an offer is exactly the mistake Harvey made.

Feature	Offer (proposal)	Invitation to treat
Intention to be bound	Yes — ready to be bound once accepted	No — only willing to negotiate
Effect of "acceptance"	Forms a binding contract	Creates only a counter-offer, which the other side may accept or reject
Indian Contract Act	"Proposal" — Section 2(a)	Not a proposal; precedes one
Typical examples	A firm "I will sell you X for ₹Y"	Price quotations, ads, shop displays, tenders, auctions

Harvey v. Facey in Indian contract law

Although an English/Privy Council decision, Harvey v. Facey is routinely cited by Indian courts and textbooks because the Indian Contract Act, 1872 builds on the same offer–acceptance framework. Section 2(a) defines a "proposal", and Indian law mirrors the English distinction between a proposal and an invitation to offer.

The leading Indian application is Bank of India v. O.P. Swarnakar (2003) 2 SCC 721, where the Supreme Court held that a bank's Voluntary Retirement Scheme was not a proposal but merely an invitation to treat; the employee's application under the scheme was the offer, which the bank could accept or reject. The Court expressly noted that whether a statement is an offer or an invitation to treat "depends primarily on the intention with which it was made" — the very test applied in Harvey v. Facey. The same logic governs Indian advertisements, tender notices and price quotations, which are generally treated as invitations to offer rather than offers.

Case impact

More than a century on, Harvey v. Facey remains a foundational authority for distinguishing offers from invitations to treat. The principle shapes how businesses present prices and how lawyers draft pre-contractual communications: supplying information or quoting a price keeps a party free to negotiate, whereas a definite offer exposes them to a binding contract the moment it is accepted.

For anyone forming a contract, the lesson is to be explicit about which stage they are at — invitation, offer, or acceptance — because, as Harvey learned, an apparent "yes" to a price quotation does not necessarily make a deal.

Key contract principles

For a contract to be legally binding, the following essential elements must be satisfied — each illustrated by the failure point in Harvey v. Facey:

• Offer (proposal): a clear, definite proposal showing intent to be bound when accepted. This was the missing element — Facey never made an offer.
• Acceptance: an unqualified acceptance of the offer's terms. Harvey's "acceptance" had no offer to attach to.
• Intention to create legal relations: the parties must intend a legally binding agreement.
• Consideration: under Indian law (Section 2(d) of the Contract Act), something of value must be exchanged.
• Communication: offer and acceptance must be communicated between the parties.

Main takeaways from Harvey v. Facey

• A statement of the lowest price in answer to an enquiry is an invitation to treat, not an offer capable of acceptance.
• Facey's "£900" telegram answered only the question of price and showed no intention to be bound to sell.
• Harvey's "we agree to buy" telegram was itself the offer — and it was never accepted, so no contract arose.
• The decision draws the durable line between offer and invitation to treat, applied in India through Section 2(a) of the Contract Act and cases like Bank of India v. O.P. Swarnakar.
• Whether a communication is an offer or an invitation to treat turns on the intention with which it was made.