An aircraft manufacturer was obliged under contract to buy back an aircraft from a hire purchase company on three conditions. (1) when the hire purchase company foreclosed on the purchasers, (2) where the manufacturer had been given notice of the purchasers’ defaults and (3) (implied by the Court of Appeal) where the buyback was called within a reasonable time. It was held that due to non-compliance with (2) and (3) the hire purchase company could not enforce the option.
Held: Lord Denning MR said: ‘In point of legal analysis, the grant of an option in such cases is an irrevocable offer (being supported by consideration so that it cannot be revoked). In order to be turned into a binding contract, the offer must be accepted in exact compliance with its terms. The acceptance must correspond with the offer.’ Diplock LJ: ‘Accordingly, the event giving rise to Eagle’s unilateral obligation to buy the aircraft has not occurred and can never occur. There is no obligation: there can be no breach. The action must fail.’ A unilateral offer capable of acceptance so as to create a binding obligation was referred to as an ‘if’ contract: I will do or refrain from doing x if you will do or refrain from doing y. It can be ‘accepted’ and so become binding by the promisee doing or refraining from doing y. An offer by the defendant was open to acceptance by the claimant only if the acceptance was in exact compliance with the terms of the offer.
Denning MR, Diplock LJJ
[1968] 1 All ER 194, [1968] 1 WLR 74
England and Wales
Citing:
Cited – Carlill v Carbolic Smoke Ball Co CA 7-Dec-1892
Carlill_CarbolicCA1893
The defendants advertised ‘The Carbolic Smoke Ball,’ in the Pall Mall Gazette, saying ‘andpound;100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by . .
Cited by:
Cited – Haugland Tankers As v RMK Marine Gemi Yapim Sanayii Ve Deniz Tasimaciligi Isletmesi As ComC 9-Mar-2005
An option agreement was granted for the sale of a ship hull. The option was excercised but the defendant claimed the commitment fee required was not paid.
Held: The exercise of an option had to be in the precise terms set out in the contract. . .
Cited – United Scientific Holdings v Burnley Borough Council HL 1978
The House was asked whether a failure by a lessor to keep strictly to the timetable laid down in a rent review clause in a lease necessarily deprived the lessor of the benefit of the rent review.
Held: A stipulation as to time in an option . .
Cited – Carmarthen Developments Ltd v Pennington SCS 24-Sep-2008
carmarthen_penningtonSCS2008
Contracts had been entered into for the sale of plots of land, which were conditional on planning permissions being approved by the purchaser. The buyer could waive the conditions to remove the sellers’ rights to resile. The buyer obtained the . .
Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.183119