Gibson Vs Manchester City Council (Research Paper Sample)

Gibson Vs Manchester City Council
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Introduction
According to the Law of Contracts, for a contract to be effective there must be an offer by one of the parties. When the other party accepts the offer, then we can say there is contract between them. However, if there is no offer or the second party does not accept the offer, then the contract that may have been anticipated is null- and- void. For instance, if a trader offers to sell a phone to a buyer at the price of £1000, the buyer may accept or turn down the offer. If the potential buyer turns down the offer, there will be no contract between the two. However, if the buyer accepts the offer and pays for the phone, the two will have entered into a legally- binding contractual agreement.
Facts
In 1971, the Conservative Party, which ran the Manchester City Council, had a policy of selling Council houses to people (Law school case briefs, 2015). When Mr. Gibson applied for a detail in price and mortgage terms on the council form, the treasurer sent the following response in February 1971.
The corporation may be prepared to sell you the house at a buying price of £2,275 less 20% (freehold). This letter should not be treated as a firm offer of a mortgage. If you wish to make a formal application, please fill in the enclosed form and send it back to me.
Gibson completed the form in March 1971, except on the price section, and sent it back to the treasurer. When the labor party came to power later that year, it stopped the sale of all council units. However, the Labor Party promised to sell council houses to individuals who had already established a contract with the Conservative Party before leaving office. On the other hand, the officials told Gibson that they could not complete the purchase. Gibson Sued the City Council arguing a contractual agreement had already come into effect when he sent the completed form.
Ruling
Lord Denning of the court of appeal was of the opinion that there was a binding contract between the two parties. His judgment was based on the correspondences between the parties. He said the "conduct" of the parties suggested there was a contractual agreement between the (Law School Case Studies, 2015). When Geoffrey Lane dissented, the council decided to appeal the ruling.
The House of Lords upheld the council’s appeal unanimously. The court centered its ruling on the fact that the council had not made an offer to Mr. Gibson for the purchase of the council houses. Using this argument, Gibson had "accepted" an offer not proposed by the council hence inexistent. The court further ruled the letter sent to Gibson by the treasurer was not an offer to a contract. In the letter, there was a statement that read, "The council may be prepared to sell the house to you”. The use of the word "May" in the context did not signify an offer for a purchase. However, the lords that dissented the e.g Lord Diplock, said that although the agreement did not meet the laid down criteria for a contract, the parties were in the process of a negotiation for a contract. The letters sent between the parties were in line with the process of negotiation common with most contractual agreements. Lord Diplock further noted, there would have been a contract was it not for the change in council leadership.
Issue
The issue here is whether the treasure’s letter constituted an offer and whether the completed form by Gibson was an acceptance to the offer. According to Nielsen V Dysart Timbers Limited (2009), an offer states the terms on which the offeror is willing to be bound if the offeree communicates while the offer remains viable. Using this definition, the offeror did not make any statement of the terms. A statement of the terms would have been in the form of "we are willing to sell you the house at £2180. However, the treasurer wrote back saying the council "May" sell the house to Gibson. His response did not offer a statement of terms hence not considered an offer. For a contract to be considered legally binding to all parties involved, it must fulfill certain conditions set by the British Common Law. In this paper, I will discuss those conditions that directly relate to the case under study.
Offer and Acceptance
According to MacMillan and Stone (2012), the main purpose of the law of contract is to enforce the contracts that meet the legal threshold. When there is an alleged agreement between two parties, the courts will check whether the agreement meets the requirements to be legally binding. When parties enter into a contract, they voluntarily assume liabilities regarding the contract.
An offer is an expression of willingness to contract on certain terms (MacMillan & Stone, 2012) with both parties agreeing that it will be legally binding. After the acceptance, there is no need for further negotiation. Worth noting from Gibson V Manchester City Council is that not all forms of communication between the two parties constitute an offer. During the negotiation process, there are other kinds of information apart from the offer. They are- a statement of intention, a supply of information and an invitation to treat.
In a statement of intention, one party states that he "intends" to do something but does not say he "Will" do something as an offer should be. In Gibson V Manchester City Council, the letter sent by the treasurer was a statement of intention because it stated, "We may be prepared to sell you a house”. The council intended to sell the house to Gibson but did not make the offer. For it to qualify as an offer, the treasurer should have stated, "We are/will be prepared to sell you a house”.
During a supply of information, one party gives out information to the other. The information serves to enlighten and give more insight to the other party. In this particular case study, the county council gave out information to Gibson in the form of the price of the house. In the letter to Gibson, the treasurer indicated that the houses cost £ 2725 less 20% (£2180). This information enlightened Gibson and gave more insight to the sale of the houses.
An invitation to treat is an indication of a willingness to do business (MacMillan & Stone, 2012). Through a series of cases, the court has been able to class divulged information into an invitation to trade or an offer. Information given out in some circumstances that the courts have ruled it is not tantamount to an offer are:-
1 An advertisement does not qualify as an offer but an invitation to trade. In Carlill V Carbolic Smoke (1893) the courts decided an advertisement was a unilateral offer.
2 A display of goods. In Pharmaceutical Society V Boots (1953), a display of goods is not an offer. However, when the display is made via electronic means, it is treated as an offer as was in the case of Thornton V Shoe Lane Parking (1971).
3 A request to tender is an invitation to treat and the tender is the offer. "However, the invitation to treat may contain an implied undertaking to consider all conforming tenders" (MacMillan & Stone, 2012).
4 An auctioneer’s request for bids is an invitation to trade. The bid is the offer. In auctions without a base price, the auctioneer accepts collateral offers and is required to accept the highest.
From the case of Gibson V Manche...