Harvela Investment Ltd. & Others vs Royal Trust Company of Canada & Others
Reference : (1985) UKHL 16
Jurisdiction : United Kingdom
Plaintiff : Harvela Investment Ltd. and Others
Defendant : Royal Trust Company of Canada Ltd. and Others
Facts :
Royal Trust Company of Canada Ltd. owned shares in company. They invited Harvela Investments Ltd and Sir Leonard Outerbridge to make an offer to purchase shares via telex communication by sealed tender. They stated in the invitation that they will accept the highest offer.
Harvela Investments Ltd submitted a fixed bid of $2,175,000. On the other side, Sir Leonard Outerbridge presented a bid of $2,100,000 or $101,000 in excess of any other, whichever is higher. Though the claimant had offered higher fixed bid, the Royal Trust accepted Sir Leonard’s bid and valued it at $2,276,000 ($2,175,000+$101,000). In response, Harvela sued and alleged a breach of contract and claimed that referential bids like Sir Leonard’s should be considered invalid.
Issues :
1. Whether Sir. Leonard referential bid was invalid.
2. Whether Royal Trust Company was bound to accept the claimant’s offer as the highest valid bid.
Decisions :
House of lords held in favour of the claimant. Because, the invitation of the bids was unilateral. It was mentioned in the invitation that the highest fixed bid will be accepted. The purpose of such unilateral bid is, the bidders has to determine a certain price based on their own assessment and not reference to other bids. But Sir Leonard’s bid was referential and therefore, non-compliant.
As Lord Diplock explained, “the whole business purpose of unilateral contracts is to ensure that each promisee should make up his mind as to the maximum sum which [they estimate] the property is worth to [them].”
House of lords declared that, Sir. Leonard’s bid was non-compliant and there was no contract between him and Royal Trust. Subsequently, he was not entitled to any damages. Though the parties (Royal Trust and Sir. Leonard) thought they had a contract, it was void. On that account, Royal Trust was bound to accept the claimant’s offer.
Author :
1. Md. Ishrak Ahsan Khan
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