Manchester Diocesan Council for Education v Commercial & General Investments Ltd
High Court
Citations: [1970] 1 WLR 241; [1969] 3 All ER 1593; (1970) 21 P & CR 38; (1970) 114 SJ 70; [1970] CLY 2893.
Facts
The claimant owned a school. In 1964, they offered the school premises for sale by tender. The tender invitation’s conditions required any tenderers to send their tenders to the claimant by the 27th of August 1964. It also stated that any tender was subject to the Secretary of State approving of the purchase price. On acceptance of a tender, the person who submitted it would have to pay a 10% deposit within a week.
On the 26th of August 1964, the defendant posted a tender offering £28,500. Their tender stated that if the claimant accepted the offer in the manner specified in the tender, they would pay. The claimant wrote to the defendant on the 15th of September. Their letter stated that they had accepted the defendant’s tender. This acceptance letter did not comply with the conditions for acceptance in the tender. The claimant obtained the Secretary of State’s approval shortly after.
On the 23rd of December, the claimant wrote to the defendant again to confirm there was a binding contract. The defendant denied this. On the 7th of January 1965, the claimant sent a formal letter of acceptance. On the same day, the defendant sent a letter purporting to withdraw the tender.
The claimant sued, seeking a declaration that there was a binding contract and specific performance of that contract. The defendant argued that the letter sent on the 15th of September was not a valid acceptance. They also argued that the offer had expired by the time the claimant sent their January acceptance letter. It was common ground that the defendant’s withdrawal letter was sent too late. However, the defendant argued that the tender had already expired due to delay.
Issue(s)
- Was there a binding contract between the claimant and the defendant?
Decision
The Court held in favour of the claimant. The defendant’s tender was an offer which the claimant accepted by their letter of September 15. This was unaffected by the fact that the sale was conditional on the Secretary of State’s approval. This just meant that the parties obligations under the contract did not become live until this approval was obtained.
It also did not matter that the claimant’s acceptance did not exactly comply with the method for acceptance specified in the tender. This is because where the offeror mentions a particular mode of acceptance, but does not specify that only responses by that mode will be binding, any method of communication which is equally or more advantageous to the offeror will do. That the claimant did not insist on immediate payment was irrelevant: parties are not bound to insist on immediate compliance with the contract terms.
This Case is Authority For…
If the offeror specifies that the offeree should respond using a particular method or in a particular way, a response which does not meet these requirements may still be valid. This will be the case if the offer does not explicitly say that only that method will be binding, and the offeree’s method is no less advantageous than the one the offeror asked for.
Other
The court noted that if the letter sent on the 15th of September had not been a valid acceptance, the January letter would have been. The defendant argued that the offer had expired due to the delay in accepting it. However, the court thought that this depended on whether the delay indicated that the claimant refused the offer. Since the claimant had given clear indications that they intended to accept the offer, it did not expire due to delay.
Buckley LJ offered two explanations for the rule that offers lapse after a reasonable length of time. The first is that offers contain an implied term that they will lapse after a reasonable length of time. The second is that unreasonable delay indicates that the offeree refuses the offer. Buckley LJ preferred the second explanation, since the first ‘involves a certain degree of uncertainty about the precise terms of the offer’. The first would also mean that the court could not take into account the parties’ subsequent conduct. The second explanation, he thought, ‘involves simply an objective assessment of facts and the determination of the question whether on the facts the offeree should, in fairness to both parties, be regarded as having refused the offer’.
