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Storer v Manchester City Council [1974] 1 WLR 1403

FORMATION OF CONTRACT

Facts

The defendant City Council refused to proceed with the sale of a council property to the claimant under an arrangement which had been agreed with its predecessor. All of the terms of the contract had been agreed but for the date on which the lease was to end and the mortgage payments were to begin, which had been left blank on the form returned to the defendant by the claimant. The claimant alleged that the contract was completely concluded and sought specific performance of the agreement.

Issue

The question was whether the contract had been concluded, despite the fact that the date on which the claimant became a purchaser rather than a tenant was still to be determined.

Held

The Court of Appeal held that the contract was complete despite the absence of this term. In distinguishing between an offer and an invitation to treat, it is necessary to look. not to the subjective intentions or beliefs of the parties, but rather on what their words and conduct might reasonably and objectively be understood to mean. In this case the defendant had made clear by their conduct and language that they intended to be bound upon the acceptance of the offer despite the fact that some terms remained to be agreed. In the words of Lord Denning MR:

“In contracts, you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract” (p. 827).


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