P wanted to buy his council house and sent off the application form. The council sent him a form stating the price at which the council “may be prepared” to sell the house and a letter which explicitly stated that it was not to be regarded as an offer/binding. The letter invited P to “make a formal application” Following negotiations over the price/repairs to the house, the council put the house onto a list of properties that could be sold, but, following elections, decided not to make the sale. HL held that no contract existed: The letter was explicitly not an offer and the naming of a price was one that “may” be accepted i.e. not an offer. These were really invitations to treat, while moving the property onto the “sell” list was merely a signal of interest. Furthermore the request that he make a “formal application”, NOT “accept the offer” shows that there was no valid offer.
In CA Denning MR rejected the “acceptance and offer” approach and argued for an approach that looked at overall conduct, correspondence etc to see if there was an agreement to make the material terms binding (see above in CW). This was overruled by HL.
Lord Denning (NB his views are dismissed later on by HL in this case): it is impossible to reduce all types of contract down to plain offer and acceptance (as would make the reasoning so detailed and complex in this case- see HL verdict on it). He says: “You should look at the correspondence as a whole and at the conduct of the parties and see therefrom whether the parties have come to an agreement on everything that was material. If by their correspondence and their conduct you can see an agreement on all material terms — which was intended thenceforward to be binding — then there is a binding contract in law even though all the formalities have not been gone through”. This is a less formalistic approach and is better suited to cope with variety of ways that contract can be formed.
Lord Diplock: There are some types of contract which don’t easily fit into the conventional mirror-image approach, but this case does (it is easy to look at the documents and see whether there has been an offer and acceptance).