Gibson v Manchester City Council [1979] 1 WLR 294

House of Lords

Basic Facts: D (Manchester City Council) had a policy to sell council houses at discounted prices. C (Gibson) received a letter from the council stating that they might be prepared to sell a house to C at a specified price and terms, provided C made a formal application. C submitted the application, but before the sale was finalized, the council’s policy was discontinued due to a change in political control, and the council refused to complete the sale.

Issue for the Court: At what point does an offer become a binding contract?

Held : The letter from the council was not a binding offer but rather an invitation to treat. The council’s letter was intended to invite C to make a formal offer, which the council would then consider. As no firm offer was made, no contract was formed.

• Lord Diplock : The letter’s language made it clear that it was not a binding offer but a step in the negotiation process.