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Gibson v Manchester City Council [1979] 1 WLR 294

FORMATION OF CONTRACT

Facts

The defendant City Council had adopted a policy of selling council houses to its tenants. The claimant was a tenant of such a council house, who had applied for details of the house he was renting and applicable mortgage terms, using the printed form designated and supplied by the defendant for this purpose. In February 1971, the city treasurer responded to this application stating that 'The [council] may be prepared to sell you the house at the purchase price…', and providing details of the mortgage. This letter also stated that it did not amount to a ‘firm offer’ of a mortgage, and invited the claimant to make a formal application using an enclosed form. In March 1971, the claimant returned the completed form to the defendant.

Following local elections in May of the same year, control of the Council passed from the Conservatives to Labour. The new Labour Council policy was that council houses would not be sold under the previous Conservative policy unless a legally binding contract was already in place. The defendant refused to sell to the claimant, who brought an action against them in breach of contract. This action was successful at first instance and the Court of Appeal, upon which the defendant appealed to the House of Lords.

Issue

The issue on appeal was whether the defendant’s letter of February 1971 was properly construed as an offer or as an invitation to treat.

Held

The House of Lords held that there was no concluded contract and the defendant was not legally bound to sell the property, as the council’s letter did not state the price and was not an offer but an invitation to treat.

Words: 283


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