Gibson v Manchester City Council [1979]
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Gibson v Manchester City Council [1979] UKHL 6 addressed the issue of whether a binding contract had been formed between Mr Gibson and the Manchester City Council regarding the sale of a council house. The facts of the case involve a series of communications between Mr Gibson and the council.
The Manchester City Council, under the Conservative Party's policy, was selling council houses to occupants. Mr Gibson applied for details of his house price and mortgage terms. The council's Treasurer replied, stating that the corporation "may be prepared to sell" the house to him at a specified price, but emphasised that the letter should not be regarded as a firm offer of a mortgage. Mr Gibson completed the application form and returned it to the council, but subsequent to the May 1971 election, when the Labour Party took power in Manchester, the new administration halted new sales. Mr Gibson was then informed that he could not complete the purchase, leading him to sue the council, claiming that a binding contract had already been established.
The Court of Appeal, with Lord Denning MR in the majority, held that there was a contract based on the overall correspondence and conduct of the parties. However, Geoffrey Lane LJ dissented, arguing that there was no contract. The council appealed to the House of Lords.
In the House of Lords, the unanimous decision was in favour of the council. The key point was that the council's letter was not an offer but an indication that they "may be prepared to sell" the house. The wording of the letter, including the invitation to make a formal application, did not constitute a clear offer capable of acceptance. The House of Lords emphasised the importance of looking at the documents as a whole and applying the conventional approach of determining whether there was a contractual offer and acceptance.
Lord Diplock stated that, despite some exceptions, contracts formed through an exchange of correspondence should be analysed as constituting an offer and acceptance. The crucial language in the council's letter, such as "may be prepared to sell", made it impossible to construe the letter as a contractual offer capable of being accepted by Mr Gibson.
Lord Russell of Killowen agreed, highlighting that the language used in the letter did not allow for the construction of a firm offer to sell capable of acceptance, and the statement regarding the letter not being a firm offer of a mortgage did not transform it into a firm offer to sell.
In summary, the House of Lords concluded that there was no binding contract between Mr. Gibson and the Manchester City Council, as the council's communication did not constitute a clear offer that could be mirrored by a clear acceptance.
The Manchester City Council, under the Conservative Party's policy, was selling council houses to occupants. Mr Gibson applied for details of his house price and mortgage terms. The council's Treasurer replied, stating that the corporation "may be prepared to sell" the house to him at a specified price, but emphasised that the letter should not be regarded as a firm offer of a mortgage. Mr Gibson completed the application form and returned it to the council, but subsequent to the May 1971 election, when the Labour Party took power in Manchester, the new administration halted new sales. Mr Gibson was then informed that he could not complete the purchase, leading him to sue the council, claiming that a binding contract had already been established.
The Court of Appeal, with Lord Denning MR in the majority, held that there was a contract based on the overall correspondence and conduct of the parties. However, Geoffrey Lane LJ dissented, arguing that there was no contract. The council appealed to the House of Lords.
In the House of Lords, the unanimous decision was in favour of the council. The key point was that the council's letter was not an offer but an indication that they "may be prepared to sell" the house. The wording of the letter, including the invitation to make a formal application, did not constitute a clear offer capable of acceptance. The House of Lords emphasised the importance of looking at the documents as a whole and applying the conventional approach of determining whether there was a contractual offer and acceptance.
Lord Diplock stated that, despite some exceptions, contracts formed through an exchange of correspondence should be analysed as constituting an offer and acceptance. The crucial language in the council's letter, such as "may be prepared to sell", made it impossible to construe the letter as a contractual offer capable of being accepted by Mr Gibson.
Lord Russell of Killowen agreed, highlighting that the language used in the letter did not allow for the construction of a firm offer to sell capable of acceptance, and the statement regarding the letter not being a firm offer of a mortgage did not transform it into a firm offer to sell.
In summary, the House of Lords concluded that there was no binding contract between Mr. Gibson and the Manchester City Council, as the council's communication did not constitute a clear offer that could be mirrored by a clear acceptance.
