A writes to B offering to sell him his house at a certain price. B, at the same time and on the same day, writes a letter offering to buy the same house at the same price. The two letters cross each other. Is there a contract between A and B?

Question: A writes to B offering to sell him his house at a certain price. B, at the same time and on the same day, writes a letter offering to buy the same house at the same price. The two letters cross each other. Is there a contract between A and B? [Punjab JS 2006]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [A writes to B offering to sell him his house at a certain price. B, at the same time and on the same day, writes a letter offering to buy the same house at the same price. The two letters cross each other. Is there a contract between A and B?]

Answer

Section 2(a) of the Indian Contract Act, 1872 provides that when one person signifies to another his willingness to do or to 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. Section 2(b) of the Act provides that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.

Therefore, when a proposal is made, the other to whom it is made has to signify his assent thereto.

Cross offer: Two parties make a cross-offer under certain circumstances. It means that both make the same offer at the exact time to each other. However, in either case, the cross-offer will not amount to accepting the offer.

The example of the present case is of Cross offer: ‘A’ and ‘B’ both send letters to each other offering to sell and buy B’s house at the same time. This is the cross offer made where one party needs to accept the offer of another.

In this case at hand, A is alleged to have offered to sell his house to B. The offer has been made by writing a letter. At the same time and on the same day, B is alleged to have made an offer to A, by writing him a letter, to buy the very same house offered by A in his letter. But both the letters cross each other.

Both the letters are letters of offer addressed by one to the other written without knowing about the letter of the other. Neither A nor B wrote his letter signifying his assent to the letter of offer. As aforesaid, the offer becomes a promise only when it is accepted. In the given circumstances, only when B accepts the offer conveyed to him by A in his letter it would become a promise. Similarly, only when A accepts the conveyed to him by B in his letter, it would become a promise.

Here, none of the letters is by way of an acceptance of the offer made by the other. So, this is a case of the cross offers with no acceptance. Consequently, this is not a case of a contract between A and B.

In the leading case of Tinn v. Hoffmann [(1873) 29 LT 271], the offers to buy the iron on similar terms were being placed against the same parties by the same parties respectively. The court held that the offer so made by the second party against the first one would not constitute to be an offer.

It is because the party was not aware of the initial offer so made by the first party and secondly, only an offer from the other party would not make it an acceptance at any cost. Also, it cannot be treated as any mutual acceptance. No binding effect would accrue on either party.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X