DEVELOPER’S LETTER HELD NOT TO AMOUNT TO AN OFFER

The Court of Appeal in Crest Nicholson (Londinium) Ltd v Akaria Investments Ltd [2010] EWCA Civ 1331, [2010] All ER (D) 259 (Nov) held that there is a difference between the court’s task when seeking to ascertain the intention of the parties under the terms of a contract which both parties accept has been made and the court’s task when seeking to determine whether a contract has been made at all. In the former case the court is concerned to ascertain what the parties intended by the words used in the agreement made, whereas in the latter it is to identify an offer made by one party which has been accepted by the other. When deciding whether or not A has made an offer to B, the court must ask whether a person in the position of B (having the knowledge of the relevant circumstances which B had), acting reasonably would understand that A was making a proposal to which he intended to be bound in the event of an unequivocal acceptance. On the facts of the case the Court of Appeal held that the letter sent by the developer to the owner did not amount to an offer which was capable of acceptance.