About the Author
Ananditha S R is a 2nd year student doing BA LLB from Government Law College, Trivandrum .
Facts
B requested A to send him the price list of certain goods. On his request A sends him the price list. B orders certain goods specified in the list at the same price given in the list. A did not execute the order for supply.
Issues
1)Has this situation created an agreement between A and B and if so is there a valid contract between them?
2)Is there any remedy available to B?
Analysis
B is entitled to get any remedy only if there has been a valid contract. Section 2(h) of the Indian Contract Act, 1872, defines contract as an agreement which is enforceable by law. Section 2(e) defines agreement as every promise and every set of promises forming consideration for each other. When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining his assent of that other to such acts or abstinence is called a proposal. A proposal when accepted becomes a promise. Only a promise clubbed with a consideration will make an agreement and only a valid agreement leads to the formation of a valid contract.
Sometimes a person may not offer to sell his goods, but makes some statements or gives some information with a view to inviting others to make offers on that basis. This is called invitation to offer. It is a preliminary step in the formation of a contract and does not itself constitute an offer that can be accepted to form a binding contract.Therefore, in the present case A sending a price list to B on latter’s request cannot be considered as a proposal/ offer from the part of A. If a statement is made without any intention to obtain the assent of the other party cannot be termed as a proposal. If there has been no proposal from the part of A, B placing orders for certain goods from the price list is merely an offer/ a proposal. Nobody is bound to accept an offer. A has the discretion of choosing whether to accept the proposal made by B or not.
Precedents
In Harvey v. Facey (1893) AC 552,the court held that quoting of the price was held not to be an offer. In this case, the defendant owns a plot of land known as Bumper Hall pen. Plaintiff being interested in buying that plot sent a telegram asking his willingness to sell the plot and secondly enquired about the plot’s lowest price. Defendant in return, telegraphed the lowest price. Plaintiff in return sent a telegram stating that he was ready to buy that plot at the said rate. The defendant refused to sell the plot. Court observed that the first telegram had asked two things, one regarding the willingness to sell and the other regarding the lowest price. Sending the lowest price was not an offer but merely an invitation to offer. The telegram from the plaintiff stating his willingness to buy is only an offer and the defendant has the discretion of whether to choose it or not.
In Pharmaceutical Society of Great Britain v. Boots Cash Chemists Ltd (1952) 2 QB 795, It was held that if an intending buyer was willing to purchase the goods at a price mentioned on the tag, he could make an offer to buy the goods. The shopkeeper had the option to buy the goods. The shopkeeper had the option to accept the offer or reject the same. The contract would arise only when the offer was accepted.
Similarly in the case, Badri Prasad v. State of Madhya Pradesh AIR 1970 SC 706, the sending of a letter by the divisional forest officer enquiring whether the plaintiff was ready to pay a certain amount for a contract was considered as an invitation to offer. The letters in reply by the plaintiff was an offer.
From the facts, issues analysed and precedents quoted, it can be said that sending the price list by A was merely an invitation to offer and the reply from B was only an offer, which A had the discretion of accepting or refusing it. In the present case since the offer by B was not accepted by A, there has been no agreement and so there is no contract between A and B. Therefore, it can be said that B is not entitled to avail any remedy.
(Question from Munsiff Magistrate Exam Main 2022)
