In Powell v Lee, the plaintiff, Mr. Powell, was an applicant for the position of headmaster at a school. The defendant, Mr. Lee, was a member of the school’s governing body. During the hiring process, the members passed a resolution appointing him. One of the members, however, in his individual capacity informed him of such resolution. Powell relied on this information and made significant preparations for the role, including resigning from his previous position.

However, the school’s governing body ultimately decided to appoint another candidate. Powell was not notified of this decision by the Board, and he only learned of it when the new headmaster was publicly announced. Powell claimed that the failure to appoint him, as informed, and hence promised by a member, amounted to a breach of contract, and he sought damages for the loss and inconvenience caused.

• 1. Whether a binding contract existed between Powell and one member regarding Powell’s appointment as headmaster.
• 2. Whether Board’s failure to appoint Powell constituted a breach of contract.
• 3. Whether Powell was entitled to damages for the alleged breach.

The court examined whether a binding contract had been established. The information passed by one member, though unequivocal, lacked formal acceptance by the governing body, which was essential for the appointment process. The court noted that the member did not have the unilateral authority to make the appointment and that the governing body’s role was critical in finalizing such decisions.

The court also considered Powell’s reliance on the promise and whether it was reasonable to assume that the verbal assurance constituted a binding agreement. Additionally, the court assessed whether Powell had suffered actual damages as a result of the failure to secure the headmaster position.

The court concluded that no binding contract existed between Powell and the Board. The information communicated by one member did not amount to a legally enforceable agreement because it lacked the formal acceptance required by the governing body. The Court held that there was no contract as there had been no authorised communication of intention to contract on the part of the Board and the communication of appointment without the authorisation of the Board was insufficient to create an enforceable contract. As a result, Powell was not entitled to damages, as there was no breach of a contract that had legally been formed.

The judgment emphasizes upon the principle of ‘Communication of Acceptance’ which asserts that, for a promise to be enforceable it must involve clear, formal acceptance and agreement on material terms, by the competent authority, which was not present in this case.