Daulia Ltd v Four Millbank Nominees Ltd [1977] EWCA Civ 5 is an English contract law

English contract law

English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...

 case, concerning unilateral contracts, and when embarking on the performance of an act for which an offer is open, at what point the offer may be withdrawn. In particular, Goff LJ observed that there would be a duty to not prevent full performance of terms in a unilateral offer, once performance had begun.

Facts

Daulia Ltd wanted to buy the premises on Millbank

Millbank

Millbank is an area of central London in the City of Westminster. Millbank is located by the River Thames, east of Pimlico and south of Westminster...

, London from Four Millbank Nominees Ltd, who were mortgagees in possession. Formal contracts were never exchanged, but Daulia argued they did obtain a unilateral contract by the first defendants that they would enter into a written contract of sale, if they attended Four Millbank's offices with a draft contract on terms already negotiated and a deposit. But when Daulia Ltd's representatives attended, Four Millbank refused to exchange. Daulia Ltd claimed breach of the oral agreement.

At first instance, Brightman J struck out Daulia Ltd's statement of claim for failing to comply with s.40(1) of the Law of Property Act 1925

Law of Property Act 1925

The Law of Property Act 1925 is a statute of the United Kingdom Parliament. It forms part of an interrelated programme of legisation introduced by Lord Chancellor Lord Birkenhead between 1922 and 1925. The programme was intended to modernise the English law of real property...

 (now, the requirement of form for contracts for interests in land under s.2, Law of Property (Miscellaneous Provisions) Act 1989

Law of Property (Miscellaneous Provisions) Act 1989

The Law of Property Act 1989 is a United Kingdom Act of Parliament, which lays down a number of important provisions for English property law....

). Daulia Ltd appealed.

Judgment

The Court of Appeal dismissed Daulia Ltd's appeal. They held there was a unilateral contract for disposition of land, and therefore it could not be effective because it did not comply with s.40(1). Furthermore there was no act of part performance, which could lead to a binding contract. In the course of his decision Goff LJ said that had there been part performance, it would be a duty of the offeror to not prevent full performance (see also, Errington v. Errington). Goff LJ's judgment went as follows.