Errington v Errington [1952] 1 KB 290 (CA)

Facts

• A father purchased a house for his son and daughter-in-law, financing it with a mortgage for which he was legally responsible.
• He promised the son and daughter-in-law that the house would become theirs if they paid off the mortgage instalments.
• Before the mortgage was fully repaid, the father died.
• The father's widow claimed possession of the property and sought to evict the daughter-in-law, who had since divorced the son.
• The dispute centered on whether a binding contract existed and whether it bound the father's estate and third parties.

Issues

1. Whether the father's promise constituted a binding unilateral contract upon commencement of performance.
2. Whether the offer could be revoked once the son and daughter-in-law began paying the mortgage.
3. To what extent the contract was binding on the father's estate and third parties after his death.
4. Whether the status of the daughter-in-law was that of a contractual licensee and if this status gave rise to proprietary rights.
5. Whether the outcome in Errington v Errington was affected by later case law, particularly regarding proprietary rights conferred by contractual licences.

Decision

• The court held that the father's promise to transfer the house upon complete payment of the mortgage formed a unilateral contract.
• Once the son and daughter-in-law began performing—by paying instalments—the offer became irrevocable so long as performance continued.
• The obligation to transfer the property, upon full payment, bound the father's estate after his death.
• The daughter-in-law was entitled to remain in the property as a contractual licensee with an equitable right to obtain title upon completion of the payments.
• Denning LJ stated that such a contractual licence could not be revoked in breach of contract and could, in some circumstances, bind successors, except a purchaser for value without notice.
• The principle that a contractual licence is a proprietary right was subsequently overruled in Ashburn Anstalt v Arnold [1988] 2 All ER 147; contractual licences do not normally create proprietary interests enforceable against third parties.
• The result in Errington was later affirmed in Ashburn Anstalt, not on proprietary grounds but because of reliance leading to a constructive trust.
• Soulsbury v Soulsbury [2007] EWCA Civ 969 confirmed the principle that a unilateral contract cannot be revoked once performance has started, affirming Errington's obiter on revocation.

Legal Principles

• In a unilateral contract, the offeror’s promise is accepted by commencement of the stipulated act, and the offer becomes irrevocable upon part performance.
• Revocation of a unilateral offer is not permitted once the offeree has begun performance, provided performance continues.
• Contractual licences confer personal (not proprietary) rights, and their enforceability against third parties is limited.
• Obligations under a unilateral contract may bind an offeror’s estate after death if performance has commenced.
• Later case law distinguishes between contractual licences and proprietary interests, clarifying the scope of enforceability.
• Judicial pronouncements made obiter can become binding ratio decidendi if affirmed in subsequent cases.

Conclusion

Errington v Errington established that a unilateral contract becomes binding once performance begins, preventing revocation by the offeror, with obligations binding successors and estates. While the proprietary nature of contractual licences proposed by Denning LJ was later rejected, the decision’s result and its principles concerning revocation and reliance have been affirmed in subsequent authority, underscoring the enduring significance of the case in contract law.