University of Plymouth v European Language Center Ltd

In a continuing commercial relationship, prior dealings, mutual trust and an expectation of future business do not themselves create a binding contract. A communication is an offer only if, objectively construed in its context, it shows an intention to be bound and contains, or incorporates, the essential terms of the proposed agreement. Acceptance must be communicated in sufficiently clear terms. Acceptance by conduct requires conduct which is unequivocally consistent with acceptance and which comes to the offeror’s attention. Preparatory activity or discussions contemplating a future formal agreement are insufficient. An alleged oral agreement must likewise be supported by clear evidence of agreed terms and an intention to create legal relations.

The University of Plymouth claimed unpaid fees for facilities supplied to European Language Center Ltd. ELC counterclaimed for damages, alleging that the University had breached a contract to provide accommodation and facilities for summer 2006.

The County Court held that an email offering a maximum of 200 places amounted to an offer, and that ELC had accepted it by conversation or conduct. Judgment was entered for ELC on the counterclaim, with damages to be assessed. The University appealed, contending that no binding contract had been formed. The central issue was whether the parties had reached a legally binding agreement for the 2006 provision.

Lord Justice Moore-Bick delivered the judgment, with which Sir Andrew Morritt CVO and Lord Justice Etherton agreed. The appeal was allowed.

1. No binding offer. The email of 24 May 2005 had to be construed against both the parties’ longstanding commercial relationship and their established practice of entering into detailed written agreements each year. It described accommodation as provisional and not settled. It omitted essential matters, including teaching and leisure facilities, the terms of provision, price and payment terms. It did not incorporate the terms of the 2005 agreement. Objectively, it was information about likely availability rather than a binding offer.
2. No acceptance. Acceptance must be communicated in terms sufficiently clear to leave the offeror in no doubt that a contract has been formed. Conduct can amount to acceptance only where it is unequivocal, consistent only with acceptance of the offer, and brought to the offeror’s attention. General discussions, an assumption that accommodation would be available, and ELC’s organisation of its 2006 programme did not satisfy those requirements.
3. Alternative oral agreement. ELC’s alternative case that an agreement was reached orally in July 2005 was not established. It was difficult to identify when or how the agreement was made, the contention had not formed part of the pleaded case, and the Recorder had made no findings sufficient to support it. The evidence did not clearly establish agreed terms and an intention to create legal relations. A contract also required terms sufficient to enable the arrangement to operate.
4. The Court of Appeal considered it unnecessary to decide whether a contract based on the May email would in any event have failed for uncertainty. No contract for summer 2006 had come into existence.

• Court of Appeal (Civil Division): Allowed the University’s appeal from the County Court order entering judgment for ELC on its counterclaim, with damages to be assessed.
• Plymouth County Court: Mr Recorder Lickley QC held that the May 2005 email was an offer for 200 places and that ELC had accepted it by conversation or conduct.