26 June 2026

Contract? What contract? When a council resolution to accept an offer is not binding

David Creais

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The NSW Court of Appeal’s decision in Piety Developments Pty Ltd v Cumberland City Council is a timely reminder that, for councils, passing a resolution to “accept” an offer is not the same thing as entering into a legally binding contract. Even where a resolution is passed in open session, livestreamed, and later recorded in Council minutes, it may still fall well short of creating enforceable contractual rights.

The case provides important guidance on how the basic principles of contract formation operate in the context of local government decision-making as regulated by the Local Government Act 1993.

Background to the dispute

Cumberland City Council owned land which it had acquired by compulsory acquisition and was using as a car park.

The Council commenced a public tender process for the sale and redevelopment of the land. That process did not result in an accepted tender and the Council resolved to enter negotiations with two proponents, including Piety Developments.

The Council asked both proponents to submit a “best and final offer”. Piety’s offer contemplated the later exchange of a formal contract, including a cash payment to be made six months after exchange.

At an ordinary Council meeting on 3 November 2021, councillors resolved to “accept the offer from Piety Developments Pty Ltd” and delegated authority to the General Manager to execute the documents. The meeting was held in public and livestreamed. The following day, unsigned draft minutes recording the resolution were published on the Council’s website.

Shortly after the meeting concluded, several councillors lodged a notice of motion seeking to rescind the resolution. Although the minutes were later confirmed and signed, no contract documents were executed and no written communication of acceptance was sent to Piety. The Council then entered the statutory caretaker period ahead of the local government elections.

Piety nonetheless claimed that a binding agreement had been formed. It argued that the Council’s resolution, combined with Piety becoming aware of it through the meeting and the publication of minutes, was enough to constitute acceptance. It sought specific performance or alternatively damages.

At first instance, the Supreme Court rejected that claim. The Court of Appeal dismissed Piety’s appeal, confirming that no binding contract had come into existence.

The central legal issue - acceptance and communication

The Court of Appeal’s reasoning turned on a basic proposition of contract law - acceptance of an offer must be communicated to the offeror to create a binding contract.

But a council resolution is an internal decision. In contractual terms, it may reflect an intention to accept an offer, but it does not complete the act of acceptance unless that intention is communicated.

Piety argued that acceptance was communicated by a combination of factors: the public nature of the Council meeting, the livestream, the posting of draft minutes online and the fact that Piety became aware that the resolution had been passed.

The Court rejected that submission - the Council did not, by words or conduct, communicate its acceptance to Piety in a way that a reasonable person in Piety’s position would understand as final and binding.

No letter or email was sent. No authorised officer told Piety that its offer had been accepted. No contract was executed. The mere fact that Piety learnt of the resolution through indirect means was insufficient.

Statutory context matters

A key feature of the Court’s reasoning was its emphasis on the statutory and regulatory framework within which councils operate. Unlike private entities, councils are public bodies subject to detailed legislative requirements governing meetings, resolutions and record-keeping.

While a party such as Piety could be taken to know that councils conduct meetings in public and publish agendas and minutes as part of their statutory obligations, the minutes are prepared in draft form and only later confirmed and signed, and council resolutions may be rescinded in accordance with statutory procedures before they are acted upon.

Against that background, the Court held that the publication of unsigned draft minutes was not a communication of acceptance for contractual purposes. It was simply a step taken in the performance of the Council’s statutory functions.

Until acceptance was formally communicated, the Council was entitled to reconsider its decision. The existence of a rescission motion further reinforced that the resolution had not crystallised into a binding commitment.

The role of minutes and writing requirements

Piety also argued that the later confirmation and signing of the minutes satisfied the writing requirements under section 54A of the Conveyancing Act 1919 (NSW), which requires contracts for the sale of land to be evidenced in writing signed by the seller.

The Court rejected this argument. It held that the minutes did not constitute a “memorandum or note” of a contract. When the minutes were confirmed and signed, a rescission motion was on foot and the Council was in caretaker mode (when a council is not permitted to enter into major contracts or land dealings). The minutes were prepared to comply with statutory obligations, not to record a concluded contract.

In short, the case confirms that councils enter contracts deliberately, not accidentally. A resolution may signal intent, but without clear and authorised communication of acceptance, there is no contract at all.

Nonetheless, councils should not treat the decision as a licence for poor practice. Different facts, particularly express communication by an authorised officer, could easily produce a different result.

What councils should learn from the case

A resolution is not acceptance. A council resolution to “accept” an offer is an internal decision, not a contract. Acceptance is only effective when communicated by an authorised person in a way that conveys final assent.
Control communications carefully. Councils should be clear about who is authorised to communicate acceptance and when. Informal conversations, emails, or statements after meetings can carry real risk if made by someone with apparent authority.
Minutes of council meetings are not contracts. Publishing draft minutes is a transparency measure, not a contractual act. However, councils should remain alert to how minutes and resolutions are described, particularly in high-value transactions.
Rescission powers matter. Until acceptance is communicated, councils retain the statutory ability to rescind or amend resolutions. That power forms part of the contractual context and should be factored into transaction planning.
Document the intended pathway to contract. Councils should ensure that reports, resolutions and communications clearly state that binding legal obligations arise only on execution of formal documents and then follow that pathway consistently.
Legal oversight is critical. Transactions involving land or major assets should have legal input at each stage, particularly around authority, signing, communication and timing.