Gibson v Manchester City Council
[1979] 1 WLR 294
House of Lords
Facts:
G wanted to buy house from council, MCC. MCC send G a form, which he filled out with a request to be told the price of the house.
MCC responded “the corporation may be prepared to sell the house to you at the purchase price of £2,725 less 20 per cent. = £2,180 (freehold)”. The letter also stated that G should make a “formal application” if he wanted to do so using the enclosed form.
G sent the letter back, asking that the price be reduced due to the condition of a path.
MCC responded stating that the price was fixed and then G wrote back, accepting the offer.
MCC removed G from their list of tenants.
When MCC changed to a Labour council, they decided that they no longer wanted to allow tenants to buy their houses, unless a legally binding contract was already in place. They notified G that the sale would not go ahead.
Legal Facts / Procedural History:
Manchester County Court
Court of Appeal – Legally binding contract, so sale must go on.
Legal Issues:
Was there a legally binding contract already in place before MCC changed policy.
Appellant (MCC) Arguments:
The tentative language makes the letter an invitation to treat, not an offer of sale.
No formal offer was made and if there was, G declined it when he provided a counteroffer.
Respondent (G) Arguments:
The correspondence between parties show that a contract was formed before MCC changed policy.
Judgement (Diplock LJ, Edmund-Davies LJ, Fraser LJ, Russel LJ and Keith LJ):
No contract, due to the tentative language “may”.
Diplock LJ: This is a test case and decision of HL is important. Attacks Denning LJ (CA) approach to finding the contract was unconventional and made in error. Uses the offer-acceptance approach. The first letter was an invitation to treat, not an offer.
Edmund-Davies LJ: No formal offer was made and G’s counteroffer meant he declined any offer previously made.
Russel LJ: Language used by MCC does not constitute an offer of sale.
Other judges agree.
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