Contract Cases: Weeks 1-3

Case name and citation: Gibson v Manchester City Council [1979] 1 WLR 294

Procedural history:
Trial court → Gibson v Manchester City Council
Appellate court → Manchester City Council v Gibson
House of Lords (another appellate court) → Manchester City Council v Gibson

the plaintiff, Gibson won the case. Manchester City Council appealed to the appellate
court, was denied. They appealed again to the House of Lords and won.

Material facts: the plaintiff, Gibson, was renting a council house in 1970 Manchester
City Council, then controlled by the Conservative Party. He was offered by the Council,

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the chance to purchase this council home at a nominated price and was sent an

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application form. Gibson completed the form (leaving the purchase price blank) and

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returned it to the Council. Before formal contracts were prepared, government elections
took place and control of the Council was passed onto the Labour Party. The Council

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denied that a binding contract with Gibson existed, Gibson sued.
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Issue and result: Gibson believes a binding contract was made.
Whether in the correspondence between the parties there can be found a legally
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enforceable contract for the sale of the dwelling house by Manchester City Council to
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Gibson
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'May be willing to sell" did not end up constituting an offer from the council and therefore
no legally binding contract had been formed.
--> the process of negotiations must be clearly distinguished from the legitimate
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establishment of a binding contract.

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Reasoning: the Council's statement was not affirmative in declaring a legally binding
contact. This is noted in the use of wording - "may be willing to sell" and hence, no form
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of contract was established.

There was no official offer made to be accepted → "may be prepared to sell the
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house to you" + "if he wished to make a formal application…". The language of the
contract must be certain.
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● Carlill v Carbolic Smoke Ball Co 1893 (CB p45)

The Carbolic Smoke Ball Co produced the 'Carbolic Smoke Ball' designed to prevent
users contracting influenza or similar illnesses. The company's advertised (in part) that:

“100 pounds reward will be paid by the Carbolic Smoke Ball Company to any person

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 who contracts the increasing epidemic influenza, colds, or any disease caused by
taking cold, after having used the ball three times daily for two weeks according to the
printed directions supplied with each ball. 1,000 pounds is deposited with the Alliance
Bank, Regent Street, showing our sincerity in the matter”.

After seeing this advertisement Mrs. Carlill bought one of the balls and used it as
directed. She subsequently caught the flu and claimed the reward. The company
refused to pay. Mrs. Carlill sued for the reward.

Mrs. Carlill was entitled to the reward. There was a unilateral contract comprising the
offer (by advertisement) of the Carbolic Smoke Ball company) and the acceptance (by
performance of conditions stated in the offer) by Mrs. Carlill.

● There was a valid offer

○ An offer can be made to the world
○ This was not a mere sales puff (as evidenced, in part, by the statement

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that the company had deposited £1,000 to demonstrate sincerity)

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○ The language was not too vague to be enforced

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● Although as a general rule communication of acceptance is required, the

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offeror may dispense with the need for notification and had done so in this case.
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Here, it was implicit that the offeree (Mrs. Carlill) did not need to communicate an
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intention to accept; rather acceptance occurred through performance of the
requested acts (using the smoke ball)
● There was consideration; the inconvenience suffered by Mrs. Carlill in using the
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smokeball as directed was sufficient consideration. In addition, the Carbolic

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Smoke Ball received a benefit in having people use the smoke ball.
● Defendant perspective --> not notified about the acceptance --> is required to
form a binding contract, no offer was made --> must know to whom is the offer
being made, no consideration, was not intended to be a promise at all (puff) -
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was vague and people shouldn't take advertisers seriously

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● Plaintiff perspective --> acceptance by conduct, company waived requirement to

provide notice of acceptance
● Consideration - giving up something you could freely do
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● Advertisement is usually an invitation to treat

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MacRobertson Miller Airline Services v Commissioner of State Taxation (1975) (WA)

(CB p50)
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● Plaintiff is an airline company

● Plaintiff’s practice was to quote the fare and availability of seats, then issue a
ticket in exchange for payment
● Ticket contained condition which allowed Plaintiff to cancel flights without
incurring liability

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 ● The view held after MacRobertson Miller Airline Services v Commissioner of
State Taxation (WA) is that the ticket only represents an offer made to the
passenger, which he accepts by presenting himself for travel. No contract is
formed by the purchase of the ticket alone.
● Unilateral contract
● Collect the taxes at agreement (when you receive ticket)
● Terms and conditions are only known after payment
● Issue: whether there was an agreement made - court said no --> so when based
on this agreement finalised? - when person is on plane
● Contract cannot be completed until the person accepting has a reasonable
to time accept the conditions

Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) (CB p54)
● At what stage of a purchase in a self-serve store is there an acceptance of offer?

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acceptance is when one pays money to the cashier
● Is the customer bound to a purchase once they place an item in their basket? no

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● Are Boots liable for selling poisons without a pharmacist's supervision?
● Goods on a display are invitation not an offer; the customer makes an offer when

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they take the goods to the register.
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● The cashier is under the shopkeeper's authority to make acceptance, hence a
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contract has not been made until the cashier accepts the purchase.
● Facts: defendant operated self service shop, one part of store drugs, purchase at
cash desk, registered pharmacist at cash desk, unlawful to sell drugs unless
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pharmacist is present
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● Sale: when does it take place

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● Customer offers, store accepts

Australian Woollen Mills Pty Ltd v Commonwealth (CB p102)

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● In June 1946 the Commonwealth Government announced that it would pay a

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subsidy to manufacturers of wool who purchased and used it for local

manufacture after 30 June 1946. The Plaintiff purchased and used wool for local
manufacture between 1946-48 and received some payments. The Government
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subsequently stopped its subsidy scheme and the Plaintiff sued the Government
for subsidies it claimed it was due.
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● Plaintiff argued:
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● (1) There was a contract between it and the Government under which
Commonwealth promised to pay subsidies if wool was bought for domestic
consumption/manufacture.
● (2) The plaintiff made purchases of wool in pursuance of the agreement.
● There must be a relationship of quid pro quo between the statement and the

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 Act. Here there was no promise offered in consideration of doing an act.
● No contract was formed.
● The statement made by the Commonwealth was not offered as consideration for
the plaintiff buying the wool. The Court stated that in cases such as this:
● ‘… it is necessary, … that it should be made to appear that the statement or
announcement which is relied on as a promise [here the subsidy statement] was
really offered as consideration for the doing of the act, and that the act [buying
and using the wool as directed] was really done in consideration of a potential
promise inherent in the statement or announcement.’
● The Court also concluded that there was no intention on the part of the
government to create legal relations; it was instead a government scheme to
promote industry.

Goldsbrough, Mort & Co Ltd v Quinn [1910] 10 CLR 674

Facts:
D - for consideration - gave P an option with regard to the purchase and lease of 2590

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acres of land. The option was to last for one week. Before the expiry of that time, D

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repudiated the option, saying it had resulted from a mistake. P accepted the offer within

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the week. P sought specific performance of the sale. D claimed that the contract for sale

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was not complete and hence damages only were payable.
Issue(s): rs e
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Could Quinn withdraw an offer where that offer had been given for consideration.
Ratio:
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It was held that the option having been given for a value of time was not revocable, and
that the acceptance of the offer by the company constituted a binding contract which
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was enforceable by specific performance.

Comments:
This case considered the issue of mistake and irrevocable offers regarding the sale of
land and whether or not a man could revoke an offer where that offer had been given for
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consideration.
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Mobil Oil Australia Ltd v Wellcome International Pty Ltd (CB p 58).
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Facts
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Mobil represented to dealers that any dealer who performed at a set level for six years
would be given a franchise for a further nine years at no cost. Mobil subsequently
discontinued the scheme and a number of dealers alleged (amongst other things)
breach of contract.
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Held
In a unilateral agreement the act of acceptance is also the consideration and act of
performance. In this case Mobil’s revocation of its scheme made it impossible for the
dealers to complete the act of acceptance. The trial judge held that once an offer was
made, requiring performance as the act of acceptance, the offeror could not revoke the

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 offer once the offeree has embarked upon acceptance. The Full Court disagreed.
Although in some cases there may be an ‘implied ancillary unilateral contract’ in which
the ‘offeror promises not to revoke once the offeree’ commences performance, that is
not the same as saying that the original offer cannot be revoked - and there is no
‘universal proposition that an offeror is not at liberty to revoke the offer once the offeree
‘commences’ or ‘embarks upon’ performance of the sought act of acceptance …'

Dickinson v Dodds (1876) 2 ChD 463, 471-474

Facts
On 10 June Dodds offered to sell house to Dickinson, stating ‘this offer to remain open
until 9.00am on 12 June". Dickinson decided to accept on 11 June but did not advise
Dodds immediately. Later on the 11th Dickinson was informed by a third party that
Dodds had sold to someone else. Dickinson then purported to accept the offer. Dodds
replied that it was too late - the property had already been sold.
Dodds - offer - property

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● Time availability

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Dodds - sells to someone else (Allen)

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Dickinson - accepts offer

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Dodds - did not give awareness to Dickinson of revocation
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Awareness is required for revocation
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The offeree has to be aware before accepting that there is revocation
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Held
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No particular form of revocation is required. All that is required is that the offeror in some
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way conveys (directly or indirectly) to the offeree that s/he had changed his or her mind
about the offer. There was no question that this had occurred here - Dickinson knew
Dodds was no longer prepared to sell before purporting to accept. The promise to keep
the offer open was not binding because it was not supported by consideration.
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Stevenson Jaques v McLean (1880) 5 QBD 346, 349-352

Facts
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An iron merchant asked the defendant whether they would accept a payment of forty
over 2 months, or their longest limit before receiving a telegram of revocation, the iron
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merchant accepted the defendant's offer (the goods were already sold)
Issue
Did this constitute a counter offer or was it a mere inquiry for information
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Decision
It was an inquiry for information. There was therefore an offer capable of being
accepted; damages awarded
Reasoning
The offeree must always be notified of the revocation

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