Case law: No contract because tenant did not clearly accept landlord's offer

Businesses and/or individuals negotiating a contract should ensure that the contract is the result of a clear, unambiguous offer by one of the parties, and an unequivocal, unconditional acceptance of that offer by the other, or there will be no contract.

A contract can only be formed in law if, among other requirements, one party makes an offer and the other party accepts it. If the other party replies with an altered offer, that is not an acceptance but a counter-offer. In those circumstances, the general rule is that the original offer lapses and there is no contract unless and until the original party accepts the counter-offer.

A landlord and tenant negotiated a lease of residential premises. The landlord signed a copy of the lease, but the tenant changed the commencement date to a date around a fortnight later to reflect the fact it was not given access to the premises until that later date. The landlord's agent initialled the change but the lease was never finalised.

Later, the tenant printed out a copy of the original lease, which showed the original commencement date, and signed and dated it. The tenant claimed that this meant it had accepted the original offer, and this therefore created a contract containing the original commencement date.

The landlord claimed there was no contract because its offer had lapsed when the tenant made its counter-offer, and the landlord had never accepted the tenant's counter-offer.

The court agreed with the landlord. The requirement for an offer and acceptance had not been satisfied. The tenant had not accepted the landlord's original 'offer' of the first commencement date and had, instead, made a counter-offer. As the landlord had not accepted the counter-offer there was no contract. Once it had made its counter-offer, the tenant could not accept the original offer by signing a copy of the lease containing the original commencement date, because the original offer had lapsed.

Operative date

  • Now

Recommendation

  • Businesses and/or individuals negotiating a contract should ensure the contract is the result of a clear, unambiguous offer by one of the parties to it and an unequivocal, unconditional acceptance of that offer by the other - or there will be no contract

Case ref: Publity AG v Chesterhill Properties Ltd [2016] EWHC 1994

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