Gibson v Manchester City Council [1979] 1 WLR 294 (HL)
The Manchester City Council adopted a policy of selling council houses to tenants. The respondent tenant applied on a printed form for details of the price and mortgage terms. The city treasurer wrote to the respondent that the Council:
‘may be prepared to sell the house to you at the purchase price of £2,725 less 20% = £2,180’.
The letter gave details of the mortgage likely to be made available and stated:
‘If you would like to make a formal application to buy . . . please complete the enclosed application form and return it to me as soon as possible.’
The respondent filled out the application form and submitted it. However, a change in political leadership within the Council occurred before contracts were formally drafted and exchanged. As a result of this change, the Council made the decision to move forward only with sales where contract exchanges had already taken place.
In response to this situation, the applicant requested specific performance of the purported contract to acquire their council house, asserting that they had accepted the offer presented in the letter from the city treasurer.
Held:
There could be no binding contract because no offer capable of acceptance had been made by
the Manchester City Council. The statements in the city treasurer’s letter that the Council ‘may be prepared to sell’ and inviting Mr Gibson ‘to make a formal application to buy’ did not constitute an offer to sell, but only an invitation to treat.
LORD DIPLOCK:
My Lords, the words I have italicised [“may be prepared to sell’
& “to make a formal application to buy”] seem to me, as they seemed to Geoffrey Lane LJ, to make it quite impossible to construe this letter as a contractual offer capable of being converted into a legally enforceable open contract for the sale of land by Mr Gibson’s written acceptance of it.The words ‘may be prepared to sell’ are fatal to this; so is the invitation, not, be it noted, to accept the offer, but ‘to make formal application to buy’ upon the enclosed application form. It is, to
quote Geoffrey Lane LJ, a letter setting out the financial terms on which it may be the council will be prepared to consider a sale and purchase in due course.
