United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd Ltd; United Dominions Trust (Commercial) Ltd v Eagle Aviation Ltd: CA 1968

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
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CitedCarmarthen Developments Ltd v Pennington SCS 24-Sep-2008
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Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.183119