Harvela Investments Ltd v Royal Trust Co of Canada, [1986] 1 AC 207
Citation:Harvela Investments Ltd v Royal Trust Co of Canada, [1986] 1 AC 207
Rule of thumb:Can an offer be made as, ‘2% more than the highest bid’ in a bidding process? No, where an offer at the time of receipt does not have a quantifiable sum of money with it, then this is not a valid offer.
Background facts:
The facts of this case were that the Royal Trusts Company owned shares in a company and they were putting these shares up for sale. Outerbridge bid $2.1 million dollars or $100,000 more than the highest bid which Royal Trust Company received. Harvela had bid £2.2 million for the shares, but lost to Outerbridge who paid $2.3 million for the shares. Harvela told the Royal Trust that the bid of Outerbridge was not valid and they wanted the shares for the 2.2 million. The Royal Trust refused to transfer the shares to Harvela and the matter ended up in Court.
Parties argued:
Harvela argued that this was not a valid offer because it did not have a specific amount in the contract. Royal Trust argued that all a valid offer needed was an amount capable of being exactly ascertained rather than a specific amount of money being needed.
Judgment:
The Court found in favour of Harvela and ordered Royal Trust to transfer them the shares for 2.2 million. The Court held that referential bids were not a valid bid because they did not contain an express amount – the Court affirmed that offers without a specific figure are not valid offers.
Ratio-decidendi:
'(Offers) expressed as a fixed sum of money', Lord Diplock.
‘The answer to the construction question itself, however, appears to me to present no difficulties in so far as it leads to the conclusion that the condition subsequent to which the vendors’ obligations under the unilateral contracts were subject was incapable of being fulfilled by either promisee except by a self-contained offer of a purchase price for the shares expressed as a fixed sum of money which did not necessitate, for its quantification, reference to offers made by any other bidders. I appreciate that this cannot be quite so obvious as I myself have thought throughout, seeing that the Court of Appeal felt compelled to come to a different conclusion’, Lord Diplock.
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