Gibson v Manchester City Council [1979] 1 WLR 294
Facts
Gibson occupied a council house and asked about buying it. The council wrote that it might be prepared to sell at an indicated price and invited him to submit a formal application. He completed and returned the form, and further correspondence occurred. Before a completed sale contract was issued, political control of the council changed and the new administration discontinued sales except where binding commitments already existed. Gibson claimed that the earlier documents constituted such a contract. The House of Lords examined their wording to determine whether an offer had actually been made and accepted.
Legal Issue
Did the council’s tentative sale letter and Gibson’s application amount to offer and acceptance before the change in sales policy?
Held
The House of Lords held that the correspondence had not produced a binding sale contract. The council's statement that it might be prepared to sell, accompanied by an invitation to make a formal application, was not an offer capable of acceptance merely by returning the form. Gibson's response therefore could not conclude a bargain which the council had not yet offered.
Lord Diplock applied ordinary offer-and-acceptance analysis to the documents relied upon. The subsequent policy change did not cancel an existing contract; it occurred before a binding sale had been established. Storer was distinguishable because its documents expressed a sufficiently definite commitment. The decision does not require every contract to be signed or prevent formation by conduct in an appropriate factual setting.
⭐ Legal Principle
Whether correspondence forms a contract depends on its objective meaning. Tentative language inviting an application may be negotiation rather than an offer. Returning an application cannot accept an offer that has not been made. A later change of policy must be distinguished from termination of a concluded contract.
Significance
Gibson is a close comparison with Storer and demonstrates why precise wording matters more than the general expectation that a sale will proceed. Both involved council-house transactions, but their documents differed in commitment. The case does not authorise public bodies to disregard concluded contracts after elections. Its significance is that the necessary agreement had not yet arisen. In an exam, identify the proposed offer, its language and the purported acceptance before considering the effect of a subsequent change of intention.
Common exam questions about this case
Why was the council’s letter not an offer?
Its language indicated that the council might be prepared to sell and invited a formal application. Objectively, further steps remained before a commitment. Gibson's return of the form therefore did not accept a concluded proposal. The court assessed what the documents actually communicated, not his understandable hope of purchasing.
Did the election allow the council to cancel an existing contract?
That was not the reasoning. The court held that no binding sale contract had been made before the policy changed. A public body's change of policy does not itself dissolve contractual obligations already undertaken. Formation must therefore be resolved before analysing any alleged right to abandon performance.
Why did Storer produce a different result?
The documents in Storer communicated a more definite commitment capable of acceptance. Similar parties and commercial objectives do not make correspondence legally identical. Comparing the precise language and remaining steps explains the difference; it is not a choice between a general formal rule and unrestricted judicial business common sense.