B2/03/1558

Neutral Citation Number: [2003] EWCA Civ 1741

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MANCHESTER COUNTY COURT
(MR RECORDER NARAYAN)
Royal Courts of Justice
Strand
London, WC2

Wednesday, 19 November 2003

B E F O R E:

LADY JUSTICE ARDEN

LORD JUSTICE DYSON

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PICKFORDS LIMITED
Claimant/Appellant
-v-

CELESTICA LIMITED
Defendant/Respondent
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(Computer-Aided Transcript of the Palantype Notes of
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
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MR S COGLEY (instructed by Messrs Beachcroft Wansbroughs, Manchester M2 7LP)
appeared on behalf of the Appellant
MR D CASEMENT (instructed by Messrs Wacks Caller, Manchester, M2 4JU) appeared on
behalf of the Respondent
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JUDGMENT

1. LADY JUSTICE ARDEN: Lord Justice Dyson will give the first judgment.

2. LORD JUSTICE DYSON: It is as if the facts of this case have been devised for an
examination question on the law of contract for first year law students. They raise
some basic questions in relation to offer and acceptance in the law of formation of
contract. The appeal turns on the meaning and effect of three documents.

The Facts

3. The claimant carries on business in the provision of business moving project and move
management services. The defendant is an IT company and, at all times material to
these proceedings, has carried on business from premises at Bradwell Wood, Stoke-on-
 Trent, Staffordshire. It wished to move some or all of its undertaking from Bradwell
Wood to Telford in Shropshire.

4. The first of the three documents is a fax dated 13 September 2001 from Mr Dawson,
the claimant's managing director, to Mr Spencer, a member of the defendant's
engineering team. It reads as follows:

"Our budget cost to undertake the relocation of the Celestica Equipment

at Bradwell Wood is as follows:

We estimate that a total of 96000 cubic foot of workshop and office

equipment and contents will need to be relocated, 1 of our 40ft long
pantechnicons holds approximately 1000 cubic foot therefore we estimate
96 vehicle loads will be required.

Cost for our crew, fuel, vehicle etc to pack, load transport and unload
from Stoke to Telford during a weekday will be £890.00 + vat.

We do not know which days you require relocations as the programme is

constantly changing. "

5. There followed provisions with regard to insurance, the charges for crate deliveries,
crate collections and crate hire. It said:

"Materials for the packing of effects anticipated to be approximately 500

units at £2.50 each for anti static packs and cartons.

Therefore we have an estimated budget figure to include all the above at

£100K.

Please call me if you require any further information."

It is not in dispute that this document was sent to the defendant.

6. During the following fortnight the claimant carried out a survey over a three-day
period. This was the prelude to the claimant's document entitled "Proposal to
Undertake the Move Managed Relocation" which was sent to the defendant on 27
September 2001. It is the second of the three documents. It is far more detailed than
the fax of 13 September. The purpose of the survey, as explained by the proposal
document, was:

"To provide a well planned and resourced move program which delivers
your requirements and ensures the minimum of disruption to your
everyday business."

7. To achieve that purpose, a survey was carried out to establish the requirements of the
defendant, the access points to the building, the requirement for specialist packaging
materials, any protective measures that might be necessary, any specialist IT equipment
requirements, any security issues and any other details which might affect the move
programme.

8. The following parts of this document are material. On the first page it states, inter alia:

"The relocation is to be undertaken by our Manchester centre with

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 additional resources supplied by our Stoke branch, vehicles and
manpower will be made available and are usually booked in advance once
confirmation of the contract is agreed, however as with the relocation of
Celestica Middlewich, due to the possibility of unforeseen events arising
throughout the relocation schedule it will be necessary for Pickfords to
operate this contract with a flexible approach.

Throughout the relocation period Pickfords will ensure that labour,

equipment and vehicles are readily available at short notice to meet the
short lead in times for each relocation phase as and when the arrive."

The document continued:

"On acceptance of this quotation Pickfords will appoint an experienced

Move Manager to Celestica."

There followed details as to the plan according to which the services would be
provided. It stated that the defendant had assured the claimant that the total relocation
would be undertaken over a number of days, including weekends, as required between
September 2001 and December 2001. The last page of this document is entitled "Fixed
Price Schedule". It states:

"Pickfords price to carry at the work will be as follows.

• To undertake the relocation as described within this document will

be a fixed price of £98760.00.

• The above costs include packing materials, crate hire for the duration
period and the standard transit insurance cover.

• Buildings Insurance £1.25 per £1000 value per property.

• All costs exclude VAT.

• Any variation to this agreement must be provided in writing to

Pickfords Business Moving at the attached address prior to the relocation
taking place.

All work undertaken, subject to Pickfords' Terms and Conditions of

Business, as per our enclosed document."

The terms and conditions of business have not been produced to the court but it is not in
dispute that they were sent to the defendant. The third of the trio of documents is a fax
from the defendant dated 15 October 2001, marked for the attention of Mike Dawson
and sent by Jean Condliffe, the defendant's site administrator. The body of the fax is in
these terms:

"CONFIRMATION

PLEASE NOTE THE FOLLOWING ORDER NUMBER HAS BEEN

RAISED TO COVER YOUR QUOTATION:

[In manuscript]

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 Ref your fax 13/9/01 from MDawson/PSpencer.

Relocation of Celestica Equipment from Bradwell Wood to Telford.

Our order number is: K12/037/814.

(Not to exceed 100K)"

9. The claimant's case was, and still is, that there was a contract and that it was contained
in the proposal of the 27 September 2001 and the fax of 15 October 2001. The
claimant carried out the work and provided the relocation services between 1
September 2001 and 29 January 2002. The claimant claims that it was entitled to the
fixed sum of £98,760 plus VAT for this work. It is not in dispute that of this sum only
£33,000 plus VAT has been paid.

10. The defendant raised a number of issues by its amended defence. Its case as to the
contract was that it was contained in the faxes of 13 September and 15 October 2001 so
that the claimant was not entitled to the fixed sum referred to in the proposal document
of 27 September, but only to a sum calculated in accordance with the charging rates set
out in the fax of 13 September 2001. On behalf of the claimant, Mr Cogley accepts that
both the document of the 13th and of 27 September 2001 were offers that were capable
of being accepted so as to give rise to a contract. I shall refer to the fax of 13
September as "the first offer" and the proposal of 27 September as "the second offer".

The Judgment

11. Before the recorder it was submitted on behalf of the claimant that the first offer was
not capable of being accepted. The recorder rejected that submission. As I have said,
that finding is not challenged on this appeal. The next submission dealt with by the
recorder was that the second offer revoked the first offer. The recorder rejected that
submission too, although he did not give any reasons for so doing. Finally, he turned to
the question whether the fax of 15 October was an acceptance of the first or the second
offer. His conclusions on that issue were as follows:

"14. In my judgment, so far as the fax 15 October 2001 is concerned, I

find it is clear that that refers back to the fax of 13 September 2001. I
have of course taken account of the submissions made by Mr Cogley as to
the meaning and consequences, for example of the word 'confirmation', at
the top of page 100....."

That is a reference to the fax of 15 October:

"....commercial reality and all his other submissions. But in my judgment

page 100 refers to the fax 13 September 2001. It is in my judgment a
confirmation of the offer contained in the fax of 13 September 2001, and
it is an acceptance in that fax of 13 September 2001 which is the reason
that the fax is referred to and details and order numbers given which is
confirmation of the work to be done.

15. In those circumstances, I find that the contract contended for by the
defence is the contract which was entered into, and it follows from that,
because I think £33,000 has already been paid in other proceedings, that
so far as the claimant's claim in this case is concerned, that is dismissed."

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 Submissions

12. On behalf of the claimant, it is submitted by Mr Cogley that the recorder should have
held that the second offer revoked the first offer. He submits that the terms of the
second offer were clearly inconsistent with those of the first offer. In particular it
contained details and provided a certainty which was lacking in the earlier document. It
related to the same subject matter as the first offer, but was seeking to put an entirely
different regime on the parties in respect of it. It sought to impose different contractual
terms, in particular the claimant's standard terms and conditions of business which had
not been incorporated in the first offer. Accordingly, Mr Cogley submits, the second
offer superseded the first offer.

13. Mr Cogley next submits that the recorder was wrong to construe the fax of 15 October
2001 as an acceptance of the first offer. Properly and objectively construed, he
submits, it was an acceptance of the second offer. He places particular emphasis on the
fact that the fax was headed "CONFIRMATION". This, he said, reflected the passage
in the second offer to which I have already referred. There was no corresponding
mention of "confirmation" in the first offer. He explained the reference to the first offer
in the fax of 15 October as being no more than a reference to the document that started
the chain of negotiations.

Discussion

14. I start therefore with the question whether the first offer was revoked. The fax of 13
September 2001 was an offer to do the work of relocation at a rate of £890 excluding
VAT per vehicle load, plus various extras (for example for insurance and hire of
crates). The document stated that it was estimated that the work required 96 vehicle
loads which was the basis of the estimated budget figure of £100,000. But it did not
offer to do the work for £100,000. It was not a fixed price offer: it was an offer to do
the work for a fixed price per vehicle load.

15. The proposal of 27 September 2001 contained a great deal more detail than the first
offer. One essential difference between the two offers was that the second was an offer
to do the work for a fixed price of £98,760. But there were many other differences
between the two documents. The second offer set out in far more detail than the first
precisely what services were being offered, what was expected of the client (the
defendant) and provisions with regard to health and safety. It also incorporated the
claimant's standard terms and conditions, which the first offer did not.

16. It is trite law that an offer may be withdrawn at any time before it is accepted. The first
offer had not been accepted before the second offer was made. The only fact relied on
by the claimant as evidence of the withdrawal of the first offer is the sending of the
second offer. At one stage I thought that this was not enough to constitute a revocation
of the first offer. An offer may be withdrawn in a number of ways. The most obvious
is an express withdrawal; that did not occur here. Another is where the offeror acts in a
way that is inconsistent with the continuing existence of the offer and the offeree knows
of that fact. Thus if A offers to sell goods to B, and before B accepts the offer A sells
to C and the fact of the sale is communicated to B, then A's offer to sell to B is
withdrawn.

17. What is the position where A makes an offer to B and then makes a later offer to B?
By making the later offer, does A withdraw the earlier one? That is the first question
that arises in this case. No authority has been cited to us in which this question has

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 been considered. In my judgment it must depend on the nature of the two offers and
the circumstances in which they are made. Take a simple case where A asks B, a
decorator, to quote for the painting of his house. Suppose, further, that B quotes A a
figure of £200 per day, plus materials. Before deciding whether to instruct B to
proceed, A decides to ask B to provide a fixed price quotation. B provides a fixed price
quotation of £1500. In those circumstances B's later quotation does not, without more,
amount to a withdrawal of the first offer. It is produced at the request of A so that A
can decide which of the two quotations to accept. That is the basis upon which the
second quotation is sought and provided.

18. In such a case, in my judgment, something more than the mere submission of the
second quotation is required to indicate that A has withdrawn the first offer. The two
offers are inconsistent with each other only in the sense that they cannot both be
accepted. But the question is not whether both offers can be accepted, but whether the
making of the second offer clearly indicates an intention on the part of the offeror to
withdraw the first offer.

19. That simple case is, however, very different from what happened here. It is true that
there are no findings of fact as to the circumstances which gave rise to the second offer.
The substantial differences between the two offers in this case went far beyond a mere
difference in price which could have been explained as consistent with two alternative
offers both being on the table for the defendant to choose which to accept. In the
absence of any findings of fact as to the circumstances which gave rise to the second
offer, I would hold that the second offer did supersede and revoke the first offer.

20. But, regardless of whether the first offer was revoked by the second, the question
remains which offer was accepted by the fax of 15 October 2001. This can only be
resolved by examining the three documents objectively and applying the usual rules of
construction.

21. In my view, the answer is clear. By its fax of 15 October 2001, the defendant accepted
the first and not the second offer. The fax of 15 October purported to accept the first
offer. The "Quotation" raised by the order was the document expressly referred to in
the body of the fax; that is the claimant's fax of 13 September 2001. There is no
reference in the fax of 15 October to the second offer.

22. I do not regard the use of the word "CONFIRMATION" in the fax as a reference to the
provision in the second offer which refers to "confirmation" of the contract agreed. Mr
Cogley puts far too much weight on the presence of this word in the fax. It is fanciful
to suppose that the word was consciously and deliberately used to reflect the passage in
the middle of the second offer to which I have already referred. "Confirmation" is an
ordinary word which is often used when an order is placed in acceptance of an offer. In
my judgment it has no particular significance. Similarly, the use of the word
"quotation" in the fax of 15 October does not clearly point to the words in the second
offer:

"On acceptance of this quotation Pickfords will...."

23. The use of the words "CONFIRMATION" and "quotation" are entirely consistent with
the fax being what it purported to be, namely, an acceptance of the first offer.
Moreover, I cannot accept Mr Cogley's submission that acceptance of the first offer is
explicable as being a reference to the first document in the series of negotiations. I do
not consider that the reference to the first offer was made for that nugatory purpose.

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24. The other point which it seems to me shows clearly that the fax of 15 October 2001 was
an acceptance of the first offer, is the inclusion of the words:

"Not to exceed 100K".

These words make no commercial sense if the fax was an acceptance of the second
offer. The essential difference between the two offers was that the second was a fixed
price quotation and the first was not. If the fax of 15 October was an acceptance of the
second offer, there was no point in adding the words "not to exceed 100K". On the
other hand, there was every reason to add such words if the defendant was intending to
accept the first offer. By these words, the defendant was accepting the first offer but
subject to a cap. I cannot accept Mr Cogley's submission that the cap of £100,000 was
introduced into the fixed price contract because the claimant's reference in the second
offer to a "flexible approach" suggested that the fixed price of £98,760 might not be a
fixed price offer after all. I find this speculative explanation entirely unconvincing.

25. The second offer was a fixed price offer and the defendant must reasonably have
understood that. The reference to £100,000 is clearly a reference back to the budget
estimate of £100,000 contained in the first offer. The defendant wanted to be assured
that the budget estimate figure was in fact the ceiling.

26. In my judgment, therefore, by the fax of 15 October 2001 the defendant did not accept
the second offer but did purport to accept the first offer. Since the first offer had been
revoked, the purported acceptance could not give rise to a contract. It was in law a
counter-offer to accept the services offered by the claimant on the terms of the first
offer, subject to the cap of £100,000. Since the work was carried out, this counter offer
must have been accepted by the claimant's conduct in carrying out the work.

27. I recognise that this analysis is different from that advanced by the parties, but the issue
raised is one of interpretation and the court must decide that issue correctly regardless
of the position taken by the parties. I should add that, even if the first offer had not
been revoked, the acceptance would have been a counter-offer since the introduction of
the words "not to exceed 100K" added a material new term. That counter-offer would,
for the same reasons as I have already given, have been accepted by the claimant's
conduct in proceeding to carry out the work.

28. All routes, therefore, lead to the same conclusion that there was a contract here and that
it incorporated the terms of the first and not the second offer with the additional term
referred to in the acceptance of 15 October 2001.

29. I would, therefore, dismiss this appeal.

30. LADY JUSTICE ARDEN: I agree. I have no doubt that on the facts of this case the
second proposal of 27 September 2001 impliedly revoked the earlier offer of 13
September 2001 by fax.

31. There is one additional point which I would like to mention. In paragraph 9 of the
judgment the judge says:

"Mr Cogley submits, rightly, that the proposal of 27 September 2001 on

the facts of this case was sent and was received by the defendant. As a
matter of fact, in my judgment, that document at page 76 [the second
proposal] does not in fact revoke or withdraw the terms and conditions set
out at page 75 [the first offer]."
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32. The position on the evidence was that Mr Jones, an employee of the defendant who had
the responsibility for giving instructions for the acceptance of the estimates received
from Pickfords, did not personally receive the second proposal of 27 September 2001.
It may be that this is one of the matter which led the judge to his conclusion in
paragraph 9 of his judgment. In so far as the judge held that withdrawal of the offer
made by the fax dated 13 September 2001 had not been effectively communicated, I
prefer the appellant's submission that there was no requirement in law for the
withdrawal of an offer to be communicated to Mr Jones. The revocation of an offer
must be communicated to the offeree, but where the offeree is an organisation, it is
sufficient if the organisation receives notice of the withdrawal: see generally Chitty on
Contracts Volume 1 28 ed, 1999, para 2-083. In this case there is no question but that it
did so.

33. The question of precisely when an organisation receives notice of withdrawal in the
case of a notice sent by the post does not arise and has not been argued. Therefore I
need not express a view thereon.

34. Accordingly, I, too, would dismiss the appeal.

Order: Appeal dismissed with costs to be subject to detailed

assessment. Appellants to pay the respondents an interim payment of
£6,000 on account

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