POWELL v. LEE- (Case Commentary)


INTRODUCTION 

Powell v. Lee is an English Contract Law case which was decided by the King's Bench Division Court in the year 1908. The citation of the case is 99 LT 284.

The case can be summed up in one line that under contract law, the offeree must communicate his acceptance to the offeror either by himself or through his authorised agent. The ground rule is that an acceptance should be communicated to the offeror. Until and unless the acceptance is communicated, no contract comes into existence.

BACKGROUND 

Powell is the plaintiff in the case where he applied for the post of headmaster in a School. The selection board, after going through all the selection processes, decided to appoint him as the headmaster. Meanwhile, one of the persons of the school managing committee who doesn't have any authority informed Powell through telegram that he had been selected for the post for which he applied. He acted out of his own individual interest and not on behalf of the selection board. But at the end, the selection board decided to appoint someone else for the post which Powell had applied for. After knowing this truth, Powell brought an action against the selection Board and the school for revoking his appointment and also stated that he had suffered loss of salary due to the breach of contract. The court held that he was not entitled to any settlement as there was no contract between the School Board and Mr. Powell. It stated that when the authorised communication is absent, there can be no contract formed. Since there was no eligible authority to communicate his acceptance here, Mr. Powell cannot be compensated. This decision was confirmed by the King's Bench Division.

ANALYSIS 

Offer and Acceptance are the first two main essentials to form a valid contract. Section 2(a) of the Indian Contract Act defines Proposal which is otherwise called an offer. Acceptance is defined under section 2(b) of the Indian Contract Act which reads as follows "When the person to whom the proposal is made signifies his assent thereto, the offer is said to be accepted. Thus the proposal when accepted becomes a promise.” An offer can be subjected to revocation even before it is accepted. Acceptance can be of two types which are expressed and implied acceptance. The former is either written or oral whereas the latter is done by conduct. There are certain conditions for the acceptance of an offer. One among them goes for the communication of the acceptance which is defined under section 4 of the Indian Contract Act, 1872. In the case of Felthouse v. Bindley, it is said that for a  contract to be valid,  the acceptance should be communicated and also such communication should be made to the offeror. It is also explained that the offeror cannot impose the duty upon the offeree  to reply and hence an offeror cannot say that failing to reply will be considered as the acceptance of the offer. Section 4(2) reads as 'the communication of acceptance is complete; as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of acceptor; as against the acceptor, when it comes to the knowledge of the proposer…' When the case of Brogden v Metropolitan Railway Company was cited in (1877) 2 AppCas 666, HL is considered, it was given that acceptance of a contract can take place by the conduct of the parties which have proper authority. 

In this case, the person who conveyed the acceptance of the offer is not a party to the contract. He is not authorised to do so. Hence the petitioner has no right to seek for the loss of salary due to a breach of contract. The School's application is an invitation to offer and Mr. Powell is the offeror whereas the school management becomes the offeree. Mr. Powell sued for breach of contract. The court held that there was no contract at all as there was no proper authorised communication of intention.  Here the school management is considered to be the authorised party to the contract. Since they didn't communicate in a proper manner, there seems to be no contract in existence. Mr. Powell was not successful in his case because the acceptance was not communicated in an effective form of communication. Also, the acceptance was communicated to him by someone who was not authorised and so there was no valid acceptance or breach of contract. The three main things to be taken into consideration are the effective forms of communication, proper authorisation of a contract and the revocation of contract. This case involves an improper communication of acceptance which doesn't lead to a contract. Also, the unauthorised acceptance of Mr. Powell's offer forms no contract. There is this rule called the receipt rule which states that the acceptance will only take effect when it has been received by the offeror. This is called as the receipt rule. This rule is subject to an exception where an acceptance is posted. 

CONCLUSION 

Thus the court's ruling that the acceptance must be properly communicated through the offeree himself or through his authorised agent is essential for a valid contract. Denying this will lead to many fraudulent activities which will shake the very basis of a valid contract i.e, the offer and acceptance. A contract is not made until acceptance is actually communicated to the offeror. 

Hence it is much needed that there should be proper communication through an authorised body. That is the acceptance must be communicated by a person with authority. The main reason behind this obligation is to protect the offeror who could otherwise find himself in the unenviable position of being bound to a contract without his knowing that his offer had been accepted.

 -Cyndhia Ravi. JR

School of Excellence in Law.

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