Centrovincial Estates PLC v Merchant Investors Assurance Company Ltd [1983] Com LR 158
Facts
During negotiations concerning a commercial lease, the landlord sent a proposal stating a rent of £65,000. It intended to propose £126,000. The tenant accepted the figure communicated before the landlord explained the mistake. The landlord then sought to avoid the apparent agreement, relying on its intended figure and the tenant's lack of a subsequent change of position. The tenant maintained that it had accepted a clear offer without knowing of the error. The dispute reached the Court of Appeal in proceedings concerning whether the tenant's case could be disposed of summarily.
Legal Issue
Could the landlord withdraw an accepted rent proposal because of an undisclosed mistake, and was any change of position beyond the reciprocal promise required?
Held
The Court of Appeal rejected the suggestion that the landlord could simply withdraw its accepted proposal because it had misstated the figure. An offer is assessed objectively from the position of its recipient. There was no established basis at that stage for concluding that the tenant knew, or ought reasonably to have known, of the error when accepting.
Acceptance in the contemplated manner could therefore form an agreement, provided consideration and the other requirements were present. The tenant did not additionally have to prove expenditure or some subsequent change of position beyond the promised exchange. The procedural ruling did not remove the need to investigate any properly supported allegation of known mistake; it rejected the landlord's attempt to rely on its undisclosed intention alone.
⭐ Legal Principle
An unambiguous offer is interpreted objectively. An offeror cannot ordinarily escape an acceptance by relying on an undisclosed error which the offeree neither knew nor should reasonably have recognised. Consideration may consist of the requested reciprocal promise without a further detrimental change of position.
Significance
Centrovincial helps separate objective agreement from subjective mistake. Compare Hartog, where the pricing error was apparent to the recipient and could not honestly be accepted as intended. It also distinguishes the consideration needed for an agreement from the reliance associated with estoppel. The procedural context matters: the court's treatment of the available evidence should not be overstated as a finding that knowledge of a mistake is irrelevant or that every mistaken written offer binds its maker.
Common exam questions about this case
Why did the landlord’s intended figure not itself settle the dispute?
The tenant was entitled to interpret the communication objectively. A private intention to propose a higher rent was not part of the offer actually received. The relevant question was whether the tenant knew or should have recognised the error when accepting, rather than what the landlord privately meant to write.
Was additional expenditure necessary after acceptance?
Not merely to show consideration for a bilateral agreement. A reciprocal promise can supply consideration where it forms the requested exchange. The court distinguished this from a requirement to show some additional change of position. The landlord could not revoke an accepted offer simply because the tenant had not yet spent money.
How would evidence of an obvious pricing mistake affect the analysis?
It could prevent the recipient from relying on the apparent offer as though it reflected an intended bargain. Hartog illustrates that limit. Centrovincial did not establish that known mistakes must be enforced; it rejected reliance on an undisclosed error without sufficient evidence that the recipient should have recognised it.