Legal Case Summary
Gibson v Manchester City Council [1979] 1 WLR 294
FORMATION OF CONTRACT
Facts in Gibson v MCC
The defendant City Council had adopted a policy of selling council houses to its tenants. The claimant was a tenant of such a council house, who had applied for details of the house he was renting and applicable mortgage terms, using the printed form designated and supplied by the defendant for this purpose. In February 1971, the city treasurer responded to this application stating that ‘The [council] may be prepared to sell you the house at the purchase price…’, and providing details of the mortgage. This letter also stated that it did not amount to a ‘firm offer’ of a mortgage, and invited the claimant to make a formal application using an enclosed form. In March 1971, the claimant returned the completed form to the defendant.
Following local elections in May of the same year, control of the Council passed from the Conservatives to Labour. The new Labour Council policy was that council houses would not be sold under the previous Conservative policy unless a legally binding contract was already in place. The defendant refused to sell to the claimant, who brought an action against them in breach of contract. This action was successful at first instance and the Court of Appeal, upon which the defendant appealed to the House of Lords.
Issue in Gibson v MCC
The issue on appeal was whether the defendant’s letter of February 1971 was properly construed as an offer or as an invitation to treat.
Held in Gibson v MCC
The House of Lords held that there was no concluded contract and the defendant was not legally bound to sell the property, as the council’s letter did not state the price and was not an offer but an invitation to treat.
Updated 19 March 2026
This summary of Gibson v Manchester City Council [1979] 1 WLR 294 remains legally accurate. The House of Lords’ decision continues to be good law and is regularly cited as an authority on the distinction between an offer and an invitation to treat in the context of contract formation. No subsequent legislation or case law has undermined its authority. Students should note that the case is sometimes read alongside Storer v Manchester City Council [1974] 1 WLR 1403, in which the Court of Appeal (on facts arising from the same Council policy) found that a concluded contract had been formed — illustrating how small factual differences can affect the outcome of offer and acceptance analysis. One minor point of presentation: the summary states that the council’s letter ‘did not state the price’, whereas the letter did in fact refer to a purchase price figure; the more precise ground for the House of Lords’ decision was that the letter was not worded as a firm offer but as a preliminary indication of possible willingness to sell. This does not alter the overall legal principle conveyed, but students reading the primary judgment should be aware of that nuance.
