Daulia v Four Millbank Nominees Ltd [1978] Ch 231 (CA)

Facts

• Daulia (the claimant) sought to purchase property from Four Millbank Nominees (the defendants).
• The parties reached an oral agreement regarding the terms of the sale, without producing a written contract.
• The defendants promised Daulia that, if a banker's draft for the deposit was arranged before 10:00 am on 22 December, a formal written contract would be created for the sale.
• Daulia undertook steps to meet this condition, but the defendants refused to proceed with the sale.
• The dispute concerned whether a unilateral contract was formed and whether the defendants could revoke the offer after Daulia had begun to perform the requested act.
• The oral agreement for the sale of land was not compliant with section 40(1) of the Law of Property Act 1925, which requires such contracts to be in writing.

Issues

1. Whether the defendants' promise constituted a unilateral offer capable of acceptance through performance.
2. At what point, if any, does a unilateral offer become irrevocable once the offeree begins performance.
3. Whether an oral agreement for the sale of land is enforceable despite non-compliance with statutory writing requirements.

Decision

• The Court recognised that a unilateral contract existed, conditioned on Daulia arranging the banker's draft by the stated deadline.
• Until the offeree (Daulia) began performance, the defendants (offerors) retained the ability to revoke their offer.
• Once Daulia commenced performance, the defendants were under an implied obligation not to prevent the satisfaction of the offer's condition, rendering the offer irrevocable from that point.
• However, the claim was dismissed due to the absence of a written contract, as required by section 40(1) of the Law of Property Act 1925.
• The Court concluded that, despite any formation of a unilateral contract, the statutory requirement for writing in land contracts took precedence, rendering the oral agreement unenforceable.

Legal Principles

• A unilateral contract arises when an offer is made and acceptance occurs through performance rather than promise.
• An offeror may revoke a unilateral offer at any time before performance commences but is bound not to hinder performance once the offeree has begun to act.
• The Law of Property Act 1925 (section 40(1)) requires contracts for the sale of land to be in writing; oral agreements for land are unenforceable regardless of contractual principles.
• An obiter dictum by Goff LJ stated that an implied obligation arises for the offeror not to revoke the offer once performance has begun, reinforcing the protection of the offeree in unilateral contracts.

Conclusion

The Court in Daulia v Four Millbank Nominees Ltd clarified that unilateral offers become irrevocable on the commencement of performance, aligning with general principles protecting offerees. However, the contract was unenforceable due to statutory writing requirements for land, establishing the primacy of legislative formalities over common law contract principles.