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Gibson v Manchester City Council is an English contract law case that took place in 1979 in which the House of Lords firmly reasserted that agreement can only exist in those circumstances where a clear offer is reflected by clear acceptance. Manchester City Council controlled by the Conservative Party advertised the details of a program for tenants that allowed buying council houses from the corporation.
Mr. Gibson was interested in this program and asked about the price for buying one of the houses. Sometime after sending the letter, Mr. Gibson received a reply from the city treasurer. The letter said that the corporation might be prepared to sell the house for £2,180. However, the letter was not to be considered as a firm offer of a mortgage (“Gibson v Manchester City Council”). Therefore, Mr. Gibson had to fill in a special form to make a formal application. When filling in the form, he left the purchase price section blank and wrote about some defects in the property.
After making the application, Mr. Gibson was informed by the Council that the price for the property had been fixed in accordance with its condition. Mr. Gibson wrote that he wanted to proceed on the basis of this application. The Council removed the house from the list of the houses occupied by other residents, as it was to be maintained by them, and added it to their house purchaser list. However, as a consequence of a local election, the Labour Party took control of the Council and nullified the program of selling council houses. Now, the Council would sell exclusively those houses where a legally binding agreement had been made (“Invitation to Treat”). Thus, Mr. Gibson had to go to court to prove his right to buy the house.
As a result of the trial, the Court of Appeal admitted that there was an agreement and ordered a particular performance, namely, an order that would oblige the Manchester Council to sell the property to Mr. Gibson. During the trial procedure, Lord Denning claimed that both parties managed to reach an agreement regarding the material aspect and that this was evidenced by their conduct and correspondence. To prove his point, he stated that despite all the formalities being not completed, the agreement between the parties had been concluded; therefore, Mr. Gibson had the right to proceed with it (Stone and Devenney 324). In addition, he strongly criticized the traditional approach which focused on the analysis of every contract solely on the basis of offer and acceptance.
Thus, the House of Lords accepted the Council’s appeal and clarified that the price for the house that the Council had written to Mr. Gibson was not an offer to him but only one of the stages in the process of the negotiations (Poole 94). The reason for such a decision was that the language used by a treasurer in the letter did not presuppose that the price was fixed. Rather, it merely stated that the house “may be prepared to sell” (Poole 37) and that the letter was not a “firm offer of a mortgage” (Pathak 113). In response to the statement that the parties’ agreement could be demonstrated by their conduct, it can be stated that their conduct was rather equivocal (Pathak 246).
As a result of the trial, the house was removed from the list of properties controlled by the Council. However, this action could be merely an indication that the house was to be sold in the near future and that it could happen as a consequence of any other agreement. The most unpleasant fact for the plaintiff was that he was uncertain whether he would receive a mortgage or not (Bailey 174). Furthermore, due to this situation, he did not know if there was any sense for him to go ahead or it would be better to stop the procedure.
Bailey, Veronica E. Cape Law: Text and Cases: Contract Law, Tort Law, and Real Property. 2nd ed., AuthorHouse, 2016.
“Invitation to Treat.” Lawmentor. Web.
Pathak, Akhileshwar. Legal Aspects of Business. 5th ed., Tata McGraw-Hill Education, 2013.
Poole, Jill. Textbook on Contract Law. 13th ed., Oxford University Press, 2016.
Stone, Richard, and James Devenney. Text, Cases and Materials on Contract Law. 3rd ed., Routledge, 2014.