''Payne v Cave'' (1789) 3 TR 148 is an old
English contract law
English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries ...
case, which stands for the proposition that an auctioneer's request for bids is not an offer but an
invitation to treat
An invitation to treat (or invitation to bargain in the United States) is a concept within contract law which comes from the Latin phrase ''invitatio ad offerendum'', meaning "inviting an offer". According to Professor Andrew Burrows, an invita ...
. The bidders make the offers which can be accepted by the auctioneer.
Facts
Mr Cave had made the highest bid for a good in an auction. But then, Mr Cave changed his mind and he withdrew his bid before the auctioneer brought down his hammer.
It was held that Mr. Cave, the defendant, was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer. Note: The common law
rule laid down in this case has now been codified in many countries in variations of the Sale of Goods Act, e.g. UK 1979 s57(2).
Judgment
The court held that Mr Cave was entitled to withdraw his offer at any time before the auctioneer accepted it. The auctioneer's request for bids was an invitation to treat, and each bid constituted an offer which could be withdrawn at any time until it's accepted, and finally, the fall of the auctioneer's hammer constituted acceptance of the highest bid.
Significance
''
Barry v Davies''
[ 0001 WLR 1962] qualified ''Payne'' by ruling that if the auction is advertised as being "without a reserve price", then the auctioneer is bound to sell to the highest ''bona fide'' bidder (and not the seller himself, as attempted in ''
Warlow v Harrison
Warlow is a municipality in the Ludwigslust-Parchim district, in Mecklenburg-Vorpommern, Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europ ...
''). Also, the
Sale of Goods Act 1979
The Sale of Goods Act 1979c 54 is an Act of the Parliament of the United Kingdom which regulated English contract law and UK commercial law in respect of goods that are sold and bought. The Act consolidated the original Sale of Goods Act 1893 ...
, s 57 states that if an auction is held without any reserve, then the auctioneer must accept the highest bid (this was subsequently applied in Barry v Davies).
In opening a contract class at
Harvard
Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
in the autumn of 1870, Professor
Christopher Columbus Langdell
Christopher Columbus Langdell (May 22, 1826 – July 6, 1906) was an American jurist and legal academic who was Dean of Harvard Law School from 1870 to 1895.
Dean Langdell's legacy lies in the educational and administrative reforms he made to Ha ...
, instead of the traditional didactic approach of lecturing a hall of students, pointed to a student and asked, “Mr Fox, will you state the facts of ''Payne v Cave''?”, then, “Mr Rawle will you give the plaintiff’s argument?” He replied to answers, in Socratic style, with “could you suggest a reason?”. This became known as the case method of legal study, that is followed around most of the common law world today.
See also
*''
Invitatio ad offerendum''
Notes
English agreement case law
1789 in case law
1789 in British law
Auction case law
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