BJS Preparation(Contract Act, 1872) (Topic: Essentials of a valid contract)
BJS Exam (Preliminary, Written, Viva)
Preparation Series
Question: ‘A’, telegraphed to ‘B’-“Would you sell your house Taj Palace, telegraph lowest price”, ‘B’ telegraphed in reply-“Lowest price for Taj Place is Tk. 50,000”. ‘A’ telegraphed “We agree to buy Taj Place for Tk. 50,000 told by you. Please send us your title deeds”. No reply was given to this telegram. Is there a binding contract between ‘A’ and ‘B’ regarding Taj Palace? And can ‘A’ sue ‘B’ for breach of contract? Give reasons and also refer case law if any on the point.
Answer: No, there is no binding contract between ‘A’
and ‘B’ and ‘A’ cannot sue ‘B’ for breach of contract. Harvey v. Facey, 1893 AC
552 and Macpherson v. Appanna AIR 1951 SC 184.
Reasons: For a valid agreement (contract) offer and
acceptance of offer is necessary.
Section 2(a) of the Contract
Act, 1872 gives the definition of the term ‘Proposal’ (Offer) in following
words-“When one person signifies to another his willingness to do or abstain
from doing anything, with a view to obtaining the assent of that other to such
act or abstinence, he is said to make a proposal”.
If we examine the facts of the
given problem in the light of definition of offer given in Section 2(a) we find
that the first telegram sent by ‘A’ (Would you sell your house Taj Place,
telegraph lowest price) is only an inquiry. The second telegram sent by ‘B’ to
‘A’ (lowest price for Taj Palace is Tk. 50,000) is also not an offer but merely
a reply to query because ‘B’ is silent in his reply on point of question “Would
you sell”. The third telegram sent by ‘A’ to ‘B’ is an offer in this case which
‘B’ has not accepted.
Thus, it is clear from the
facts of the problem that there is no binding contract between ‘A’ and ‘B’ as
first two telegrams i.e., sent by ‘A’ to ‘B’ and ‘B’ to ‘A’ are not offers.
Thus, there is no binding contract. If there is no contract, no question of
breach of contract arises and ‘A’ cannot sue ‘B’ for breach of contract.
The facts of this problem are
similar to the famous case of Harvey v. Facey, referred above. In this case
also it was held that neither the question of Harvey nor the reply of Facey
constitute an offer, hence no contract exists.
In a similar Indian case of Macpherson v. Appanna referred above, Supreme Court of India expressed the same
view taken by the court in Harvey v. Facey.
Note: In Macpherson
v. Appanna, ‘A’ offered to ‘B’ who
was an agent for ‘C’ to purchase C’s building for Rs. 6,000. In reply to B’s
request ‘C’ replied, ‘won't accept less than Rs. 10,000’. ‘A’ accepted this
price. But ‘B’ sold the building to some other person for a higher price.
Supreme Court held that a mere statement of the lowest price does not
constitute an offer.
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