Manchester Diocesan Council for Education v Commercial & General Investments Ltd 30 Oct 1969 [1970] 1 WLR 241, Ch D

The plaintiff council invited tenders with a stipulated method of acceptance. Acceptance was sent to the defendant's surveyor, not the prescribed address. The court held that a binding contract existed as the prescribed method was not explicitly mandatory and the alternative method was equally effective.

Facts

The plaintiffs, the Manchester Diocesan Council for Education, owned a property and decided to sell it by tender. They circulated a form of tender which included ‘Condition 4’, stating: ‘The person whose tender is accepted shall be informed of the acceptance of his tender by letter sent to him by post addressed to the address given in his tender’. The defendants, Commercial & General Investments Ltd, submitted a tender to purchase the property using this form. On September 15, 1964, the plaintiffs’ solicitors wrote to the defendants’ surveyors, informing them that acceptance of their offer had been recommended and approved. The defendants’ surveyor received this letter on September 18. Some months later, on January 7, 1965, the plaintiffs’ solicitors wrote a letter of acceptance directly to the defendants at the address specified in the tender. The defendants argued that no contract had been formed because the letter of September 15 was not sent to the correct address as stipulated in Condition 4, and that by the time the letter of January 7 was sent, their offer had lapsed due to the passage of time.

Issues

The court had to determine two key legal issues:

1. Was the communication of acceptance to the defendants’ surveyor on September 15, 1964, a valid acceptance that created a binding contract, despite not adhering strictly to the method prescribed in Condition 4 of the tender?
2. If the first communication was not a valid acceptance, had the defendants’ offer lapsed due to the passage of time before the second formal acceptance was sent on January 7, 1965?

Judgment

The judgment was delivered by Buckley J. in the Chancery Division. He found in favour of the plaintiffs, declaring that a binding contract had been formed.

The Mode of Acceptance

Buckley J. analysed the principles concerning prescribed modes of acceptance. He determined that an offeror can insist on a specific method of acceptance, but must use clear words to indicate that it is the *only* method they will accept. He found that Condition 4 was not mandatory, but directory or permissive. It specified a mode of acceptance but did not explicitly exclude others. He stated the principle as follows:

Where, however, the offeror has prescribed a particular method of acceptance, but not in terms insisting that only acceptance in that mode shall be binding, I am of opinion that acceptance communicated to the offeror by any other mode which is no less advantageous to him will conclude the contract.

Applying this, he concluded that communicating acceptance to the defendants’ own surveyor was no less advantageous than sending it to the address in the tender. The surveyor was the defendants’ agent in the matter, so communication to him was effective communication to the defendants. Therefore, a binding contract was concluded on September 18, 1964, when the surveyor received the letter.

Lapse of Offer

Although he had already found a contract existed, Buckley J. considered the second issue ‘obiter’ (in passing). He reasoned that even if the first acceptance was invalid, the offer had not lapsed by January 1965. The conditions of tender and the nature of the transaction (requiring approval from the Secretary of State for Education) implied that a decision might not be immediate. The defendants were aware that their offer was being processed and had not withdrawn it. In these circumstances, the period of delay was not unreasonable, and the defendants could not contend that their offer had automatically lapsed.

Implications

This case is a significant authority in the law of contract on the subject of offer and acceptance. It clarifies that if an offeror wishes to make a particular mode of acceptance mandatory, they must use explicit and clear language to this effect. In the absence of such clear language, any other mode of acceptance which is equally or more expeditious and no less advantageous to the offeror will be considered valid. This decision imports a degree of commercial flexibility into the formation of contracts, preventing an offeree’s acceptance from being invalidated on a technicality where the offeror has suffered no prejudice.

Verdict: A declaration was made that a binding contract for the sale of the property was concluded between the plaintiff and the defendant on September 18, 1964.

Source: Manchester Diocesan Council for Education v Commercial & General Investments Ltd 30 Oct 1969 [1970] 1 WLR 241, Ch D