Gibson v Manchester City Council
House of Lords
Citations:  1 WLR 294;  1 All ER 972;  JPL 532; (1979) 123 SJ 201;  CLY 2780.
Gibson leased and occupied a council house which the City Council owned. In 1970 the Council created a scheme which would allow council house tenants to purchase the properties at favourable rates. They created an application form which tenants could fill out, and provided them to the tenants.
Gibson complete his form and sent it back to the Council, enclosing the administration fee and asking how much he would have to pay for the house. The Council’s treasurer wrote back to him. The treasurer’s letter stated that the Council ‘may be prepared to sell the house to you at the purchase price of £2,725 less 20 per cent. = £2,180 (freehold)’. It also included details of a corporation mortgage, including an application form, but noted that Gibson should not regard this as a firm offer of a mortgage.
Gibson completed the mortgage application form and sent it back to the Council. He left the purchase price section blank, asking the Council to reduce the price to account for defects with the property’s path. The Council wrote back stating that the price was fixed. Gibson responded asking them to ‘carry on with the purchase as per my application.’ The Council did not reply to this letter, but took the house off the list of houses which they were responsible for.
In 1971, before any formal sale was concluded, the Council’s policy on selling council houses changed. The Council sent out a notice stating that they would only proceed with those council house sales in which there had been an exchange of contracts. This had not happened in Gibson’s case. Nevertheless, Gibson argued that there was a completed contract for the sale of the house, and sued for specific performance of the agreement.
- Was there a completed contract between Gibson and the Council?
The House of Lords held in favour of the Council. The Council never made an offer to Gibson which he could have accepted. Words like ‘may be prepared to sell’ were too equivocal to constitute an offer. The mortgage letter explicitly stated that it was not a firm offer. There was therefore no completed contract between the parties.
This Case is Authority For…
Statements which are equivocal or which invite the recipient to make an offer are usually invitations to treat, not offers.
Lord Diplock (with whom Lords Fraser and Keith agreed) thought that there might be contracts which do not fit into the traditional offer/acceptance analysis. However, he affirmed that where a claimant alleges that a contract has arisen out of the exchange of correspondence, the traditional analysis is the correct approach. He did not give any examples of what such a non-traditional contract might look like.
Lord Edmund-Davies, by contrast, disapproved of departing from the offer/acceptance approach. He thought it would cause particular difficulties in land sales (which have additional statutory requirements). In this, he disapproved of Lord Denning’s ‘alternative approach’ suggested in Butler Machine Tool Co v Ex-cell-o Corp (England)  1 WLR 401.