DAULIA v FOUR MILLBANK NOMINEES

General Principle:

An offer for a unilateral contract cannot be withdrawn if performance has been started or completed by the offeree.

Name:

Daulia v Four Millbank Nominees [1978] 2 All ER 557, CA

Facts:

Daulia (complainant) wanted to buy a series of different properties from Millbank Nominees (defendant). Inquiries were made and draft contracts were prepared. Millbank agreed that if Daulia co-produced the draft contract and a bankers' draft by a specific time, they would enter into a full contract with her. Daulia obtained the bankers' draft and submitted it to Millbank Nominee's offices before the deadline. However, Millbank ultimately refused to proceed with the deal.

Ratio:

Brightman J rejected Daulia's claim for damages, as the collateral contract did not fall into line with S40 of the Law of Property Act 1925. However, Goff LJ said obiter that

“while the offeror of a unilateral contract is entitled to require full performance of his condition and short of that is not bound, there must be an implied obligation on his part not to prevent the condition becoming satisfied, and that obligation arises as soon as the offeree starts to perform.”

Application:

Until the offeree starts to perform, the offeror can revoke the entire offer. However, once the offeree has started to carry out the obligations of the agreement, it becomes too late for the offeror to go back on his offer.

Analysis:

Two days later Brett arrives at York. Whether he will be able to get the reward will depend on where the courts deem when the acceptance took place, before the race or on the starting line of the race. In Daulia v Four Millbank Nominees [1978] 2 All ER 557, CA Goff LJ said obiter that “while the offeror of a unilateral contract is entitled to require full performance of his condition and short of that is not bound”. Thus until the Brett starts to perform, the offeror can revoke the entire offer. However, once the offeree has started to carry out the obligations of the agreement, it becomes too late for the offeror to revoke his offer (Andrews, N. H. "Reporting case law: unreported cases, the definition of a ratio and the criteria for reporting decisions." Legal Studies 5.2 (1985): 205-232).